[Congressional Record (Bound Edition), Volume 154 (2008), Part 16]
[Senate]
[Pages 21681-21682]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            ORDER FOR RECESS

  Mr. REID. Madam President, I ask unanimous consent at the hour of 4 
p.m. we have a recess until 5:30.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. There is an all-Senators briefing starting at 4 o'clock. I 
thank the distinguished Senator from Rhode Island, one of my good 
friends.
  Mr. WHITEHOUSE. I applaud the majority leader for the enormous, hard, 
successful work he is doing in these hours.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. WHITEHOUSE. Democracy as an institution will not do well if we 
are all satisfied to be told what we want to hear and not what we need 
to know. Democracy will not address problems well if our elected 
leaders traffic in ideology instead of respecting reality. Reality 
bites hard when she is ignored. Democracy will not flourish if leaders 
tout for special interests instead of fighting for the public interest.
  Democracy will suffer a terrible blow when the days of reckoning 
come, when the rendezvous with reality occurs and our people, 
particularly our young people, turn to us and say: How could you? How 
could you not have warned us? How could you not have been square with 
us? How could you have been so irresponsible?
  As elected officials, we have a trust and we had better begin to 
honor it. So as we grapple with the proposal for the biggest bailout in 
history, a $700 billion patch on Wall Street and our credit market, 
what do we look for next? What is the next wave that will hit? Well, I 
fear the next internal wave we face could be credit card debt.
  We have 115 million households in America. They have 1.2 billion 
credit cards; 115 million households in America with 1.2 billion credit 
cards. The total credit card debt that Americans will carry by the end 
of this year will likely be $1 trillion.
  To put that in context, our international gross domestic product is 
only $14 trillion. With that many cards in use and that much debt piled 
up, we now have a pretty fixed pool of credit card borrowers out there. 
This is not an expanding market. The Bush economy has stressed this 
pool of borrowers and stressed them hard.
  The average middle-class family under age 55 makes $2,000 less than 
when George W. Bush took office. Their average family expenses have 
increased by $4,600 since George W. Bush took office. If you add the 
two together, the average middle-class family is $6,600 a year worse 
off after 8 years of Republican misrule.
  So they are stressed. They are not whiners, as Senator Gramm, one of 
the Presidential candidate's campaign advisers, said, and the economy 
around them is not fundamentally sound, as one of our Presidential 
candidates has busily been telling Americans until it had become too 
preposterous to continue saying it.
  So what happens to these stressed families? Well, the credit card 
companies see a family stressed, and they see them as a worse credit 
risk, so they raise their interest rates and they impose steep 
penalties and fees. It is an industry where when you are down, they 
make it even worse for you.
  So now the family is more stressed. So they fall more behind, and a 
vicious cycle emerges. Another vicious cycle operates right alongside. 
One credit card company finds a new dirty trick to gouge the consumer, 
so they make more money. Investors and competitors see them making more 
money, and in a market economy, capital goes to the highest rate of 
return.
  So now all the other credit card companies have to copy them to 
compete. So that credit card agreement gets more and more pages, longer 
and longer, more tricks to hit you with fees, penalties, and rate 
hikes. They get more devious and complex, and nobody can get off that 
merry-go-round, because if they try, they will lose their competitive 
position to the worst of the lot.
  So you have two vicious cycles and they converge and together they 
can drive credit card debt in only one direction. The tricks and traps 
and rate increases and penalties and fees get worse and worse, driven 
by the jungle force of competition among the credit card companies. 
Struggling families see credit costs rising ever higher, driving them 
further and further underwater, with no end in sight.
  There is no present mechanism to interrupt these gathering forces. 
Now, in a reality-based mode of governing, prudent men and women would 
do something. There should be consequences when abusive lenders take 
advantage of families in difficult circumstances.
  This summer our majority whip, Senator Dick Durbin from Illinois, and 
I introduced the Consumer Credit Fairness Act, legislation that would 
provide a powerful incentive for loan companies to keep their rates and 
fees at reasonable levels and would give borrowers leverage to 
negotiate better terms. It would interrupt the vicious cycle.
  But more can be done. For generations, for generations in this 
country, the 50 States had the power to enforce their own what were 
called usury laws, laws that limited the amount of interest that could 
be charged to fair and nonabusive levels, and they were able to enforce 
their usury laws against anyone. They were their citizens and they 
could protect them.
  Then, in 1978, in a fairly narrow decision, construing the National 
Banking Act, the U.S. Supreme Court decided Marquette v. First Bank of 
Omaha and decided that States could only set limits on the interest 
rates and fees charged by in-state credit card companies.
  So what do you expect would happen? Predictably, credit card 
companies began moving to States with the weakest lending laws, with 
the worst consumer protections, setting off what has become a race to 
the bottom among credit card companies, all at the expense of 
consumers.
  I intend to propose that we restore to our sovereign States the 
rights they historically enjoyed for two centuries, to set limits on 
the interest rates and fees charged to their own citizens. It does not 
seem like asking a lot. I will

[[Page 21682]]

soon be introducing legislation to accomplish this. I encourage my 
colleagues to try to help me bring this to reality.
  If we simply reempower the States to protect their own citizens from 
unscrupulous lending practices, we can end the confluence of these two 
vicious cycles before this situation, too, gets out of hand.
  While the current economic crisis gives us this moment of clarity, 
this moment of reality, this moment of reality-based governing, while 
this $700 billion rendezvous with reality has our attention, before we 
revert to claims that the No. 1 issue facing the United States is to 
drill for more oil or whatever we get back to, while we have a moment 
of honest focus, this is our chance to get ahead of one of these 
problems.
  We will still have the $7.7 trillion Bush debt to deal with, we will 
still have the $34 trillion Medicare debt to deal with, we will still 
have the $734 trillion trade deficit to deal with, we will still have 
our energy hemorrhage to deal with, and we will still have global 
warming to deal with, to name a few.
  But let's get ahead of this one. Let's not mess up this one.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Georgia is recognized.

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