Financial law is very complicated. I understand that. There are all kinds of interlocking pieces, and small changes in law can have big unintended consequences. Something might seem like a good idea but actually would create all kinds of perverse incentives. But Sheldon Whitehouse’s amendment was pretty straightforward.
“SEC. 141. LIMITS ON ANNUAL PERCENTAGES RATES.
“Effective 12 months after the date of enactment of this section, and notwithstanding any other provision of law, the interest applicable to any consumer credit transaction (other than a transaction that is secured by real property), including any fees, points, or time-price differential associated with such a transaction, may not exceed the maximum permitted by any law of the State in which the consumer resides. Nothing in this section may be construed to preempt an otherwise applicable provision of State law governing the interest in connection with a consumer credit transaction that is secured by real property.”
That’s legalese for “no national bank can charge more in interest than what the consumer’s State’s laws provide.” Or, in other words, national banks and their subsidiaries will not be exempted from obeying state law by an act of Congress. Seems like a pretty obvious thing. Too bad only 33 Democrats and two Republicans voted for Whitehouse’s amendment.
It’s interesting how Republicans get very quiet about State’s Rights when it comes to financial regulation of usury. But it is pretty depressing to look at the list of Democrats who want to keep it safe for national banks to charge onerous interest rates. Now, I admit that I don’t fully understand current law or how Whitehouse’s amendment might have screwed certain deals up that could conceivably lead to a greater good. But, on the surface, this kind of crap stinks to high heaven. And that leads me to my impatience with the shenanigans the Democrats are carrying out regarding Blanche Lincoln’s derivative regulation.
Blanche Lincoln surprised everyone when she chose, as chair of the Agriculture Committee, to include very tough language in the Wall Street Reforms bill that would force big firms to spin off their derivatives desks. It won her a lot of headlines about how she was sticking it to Wall Street. But, Dodd announced a watered down compromise on Lincoln’s election night and then withdrew the compromise when she was forced into a run-off. Now it looks like the tough language might actually survive in the Senate bill, but everyone and their brother knows that they intend to strip the language out when the Senate bill and the House bill are melded in conference. It’s a stupid game of trying to make Lincoln look like a populist just long enough for her to win the nomination, only to reveal the truth that’s she’s a corporatist the moment after. This disturbs me.
I’m not even that upset about the fact that her language will never survive. Dodd opposes the language, as does Obama and his financial advisers. Maybe they’re right. I kind of doubt it, but I don’t understand all the interlocking pieces of this legislation. What disturbs me is the cynicism and dishonesty of trying to make Lincoln look like she’s some kind of populist. She’s not. There is a core of Democrats in the Senate (it looks to number about thirty-five) that are consumer friendly on financial matters. Blanche Lincoln is not in that core. So, stop bullshitting the voters in Arkansas. Strip her language out now and show some respect for our intelligence.
