[Congressional Record (Bound Edition), Volume 155 (2009), Part 9]
[Senate]
[Pages 12458-12460]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     PROGRESS ON CREDIT CARD REFORM

  Mr. DODD. Mr. President, I see my good friend from Alabama is here as 
well. I wanted to give my colleagues a little sense of an update. I 
know we are all anxious to know how we are progressing.
  While we haven't had a vote this morning on any amendments, I think 
words of encouragement might be helpful at this juncture, to let 
Members know we are reaching agreement or have reached agreement on a 
series of amendments that will be incorporated into either a managers' 
amendment or some manner or form.
  To give my colleagues an idea of the amendments being worked out: 
Senator Collins of Maine and my colleague from Connecticut, Senator 
Lieberman, have an amendment on what is called ``stored value'' cards 
which we will reach an agreement on; Senator Feinstein and Senator 
Corker, along with Senator Casey and Senator Grassley, have an 
amendment on university--I believe the word is either ``affiliates'' or 
``attitudes.'' Anyway, it is dealing with younger people on university 
campuses and credit cards. We have either reached an agreement on that 
or are reaching one, but one will be reached on that as well. There is 
the amendment from Senator Levin dealing with deceptive advertising, 
which I think we have reached agreement on as well. Senator Kohl has an 
amendment for a study on the marketing of credit cards. Senator 
Feinstein and Senator Gregg have an amendment on an emergency PIN 
program FTC study that has also either been agreed to or is in the 
process of reaching an agreement. Senator Akaka has an amendment 
dealing with credit counseling standards. He has been a strong advocate 
of that for many years and we thank him for it. That is also an issue 
upon which we have reached some agreement. There is an amendment 
dealing with usury and an interest rate study which I will offer.
  We had a vote yesterday on at least the waiver--we didn't actually 
have a vote on the Sanders amendment--dealing with a cap on interest 
rates set to the national credit union standard. I supported the 
Senator's effort to waive the budget point of order for us to debate 
that. That is not to say I would have agreed necessarily with that 
specific amount, but clearly there is a strong desire in the country to 
get our arms around this issue of exorbitant interest rates. I thought 
maybe we ought to be doing it, because there are different institutions 
with different methods of calculating that. We probably ought to take a 
look at how we can do that in a more comprehensive manner. So there are 
a number of agreements.
  I see my friend from Alabama. Our staffs worked together last night 
late into the evening and were able to sit down with Members on both 
sides of the proverbial aisle, as we talk about here, to reach an 
understanding. While we have not had a vote this morning on any 
amendments, work is being done to come to final conclusion on these 
amendments.
  There are amendments that we have not reached agreement on. Let me 
say to my colleagues, cloture has been filed by the leader. My hope is 
we can finish this bill today. I have a list of 30 or 40 amendments 
here from Members who wish to offer them. We have a good bill. Is it a 
perfect bill? No. Is it a bill that Senator Shelby would have written 
on his own? No. Is it one I would have written on my own? No. But, 
again, we have a product that is worthy of this institution's support. 
It is the first time we have dealt with reform of the credit card 
issuing industry. At a time when our fellow constituents are being 
hammered by rising costs, by fees and interest rate hikes that make it 
harder and harder for them to keep their families together 
economically, it is a major step forward and it is deserving of our 
support.
  That is not to suggest that many of these amendments are not good 
ideas. It doesn't mean we have finished this debate once and for all, 
forever. Obviously, we will be back on these issues. We are in this 
Congress, and we will in the next as well. We want to see how this 
works. We believe it will work well on behalf of our fellow citizens. 
But at some point we need to get moving and get this done, even though 
it comes short of everyone else's ideal goal. I say that respectfully.
  I have some Members with six or seven different amendments they want 
to offer. If that is the case, we will never finish this bill. I don't 
think that is in our interests. Every day we delay is a delay for the 
final enactment of this legislation or the imposition of its standards. 
Implementation is nine months from enactment. Every day we wait pushes 
that date further out at a time when we can help our fellow citizens in 
this matter of credit card reform.
  I won't go back through all the provisions that are incorporated in 
the bill. I have done that several times. I think my colleagues are 
pretty well aware of what is included. This is a bipartisan bill. 
People didn't think we could reach this point. We have done so. Once 
again, Senator Shelby and I have worked together with our staffs to 
achieve that. This bill has been roundly endorsed and supported by 
every major consumer group in this country. That is no small 
achievement. So there ought to be a moment of pride here that we have 
put something together worthy of our support.
  These amendments I have mentioned already which we can adopt, we will 
in either a managers' amendment or by some means by which they can be 
accepted, but then we need to take these other remaining amendments and 
I need to have colleagues decide whether they are willing to have them 
modified or studied or whether they are willing to have their 
amendments not be offered at this time. They can help considerably or 
we run the risk of losing this bill. I wouldn't have said that a day or 
so ago, but we are getting precariously close to that outcome: pushing 
this off to next week. We have the supplemental coming up. When the 
agenda is taken over by other items, it is very difficult to come back. 
So here we are on the cusp of actually achieving an unprecedented 
result and I don't want to see us lose that opportunity.
  I urge my colleagues to step up and come give us a hand to try and 
move forward on this bill.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SHELBY. Mr. President, I wish to join in and associate myself 
with some of the remarks my colleague, the chairman of the committee, 
Senator Dodd, has made. One, we have what we think, with the Dodd-
Shelby substitute, is a step in the right direction. It is a step in 
the right direction for consumers. It is also a step in the right 
direction to bring balance to the credit card industry. Is it 
everything I would want from the Republican side? No, but it is not 
everything that Senator Dodd and some of the Democrats would want. We 
have worked together to forge an outcome. We have put a lot of thought 
and a lot of work into this, as have our staffs, who have worked days 
and nights. We are close. We could pass this bill today if we could 
bring a few more people together. I think this is a milestone as far as 
protecting consumers, informing consumers, as well as to give some 
balance.
  You cannot take risk out of the marketplace. You have to consider 
risk

[[Page 12459]]

when you make loans. We have some of that in here. But we have great 
reforms in here that I think we can live with. Some people don't want a 
bill on both sides, or the others want something that is probably not 
achievable, not good for the economy, and not good for the American 
people. We have to remember that the credit card business does extend 
credit, to some extent, to people where that is their only credit. This 
bill will at least let them know a lot of the terms upfront. It will 
let them know what they are paying, and so forth. It is a step in the 
right direction. I hope we can pass that bill. I would like to do it 
today.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from Missouri is 
recognized.
  Mr. BOND. Madam President, I thank the managers of the bill for their 
good work. Their staffs have done a lot of hard work and put in a lot 
of time on the credit card bill. Their substitute amendment is a 
reasonable approach that protects consumers from abusive and deceptive 
lending practices, while allowing financial institutions to implement 
reasonable standards to account for credit risk.
  I rise today to speak on behalf of the modified Durbin-Bond amendment 
to the Dodd-Shelby substitute. This amendment would clarify the fact 
that consumers are allowed to receive a discount for purchases using 
cash, check, or debit instead of credit cards.
  All of our offices have heard from credit cardholders who are angry 
and confused about sudden interest rate increases, hidden fees, and 
obscure rules. Much of the anger and confusion stems from inadequate 
transparency in the financial system, which we are trying to address in 
the underlying bill.
  It is not only individuals and families who are struggling with 
confusing credit card rules. Over the past several months, I have heard 
countless complaints Missouri merchants, especially small businesses, 
who believe they are powerless in negotiating credit card fees that 
are, in their view, unreasonably high and account for a significant 
portion of their revenue and may, in some instances, equal their 
profit. As credit card usage has grown to become the dominant form of 
payment, these fees have squeezed their financial situation.
  Small businesses are especially feeling the stress of credit card 
fees as many of them operate at very thin profit margins. With small 
businesses being hard hit by the economic downturn and finding more 
difficulties in obtaining private financing from banks, this ``fees 
squeeze'' is being felt even more.
  Small businesses play a major role in our economy by creating jobs 
and acting as the catalyst for innovation. In order for our economy to 
recover and sustain growth, and in order for our small businesses to 
put more Americans back to work, it is critical that their cost burdens 
be minimized.
  That is why I have always been a supporter of small businesses and 
believe their tax burdens must be held down. It is for that reason that 
I believe action is needed to address the credit crisis by clearing out 
the toxic assets that clog our financial system.
  My long-term and strong support for small businesses is the main 
reason I got involved in the merchant credit card fees last year, and I 
cosponsored legislation last year by Senator Durbin to address a key 
component of merchant fees, called interchange fees. Mr. President, 
these fees are generally set at around 2 percent. They have not 
decreased. And studies indicate that rates may have increased over 
time.
  The Credit Card Fee Act of 2008 aimed at establishing a process to 
allow small businesses to negotiate so that fees could be set at 
reasonable rates. It was introduced by us. I have met, along with my 
staff, countless times with concerned stakeholders, credit card 
companies, banks who issue credit cards, and large merchants to small 
merchants. We have even held joint meetings with representatives of 
both sides. While we gained some understanding, key questions remain.
  One key question is whether interchange rates are set in a 
competitive, market driven manner. Despite several months of meetings, 
we still don't have adequate information to answer that question or 
whether the fees are reasonable and fair. It was my hope that we would 
have been able to work out an agreement, but we have not been able to 
do so.
  Chairman Dodd has indicated that the issue of interchange fees will 
have to be addressed another day. He included in the substitute 
amendment a study by the U.S. Government Accountability Office to 
provide recommendations and information.
  While interchange fees will have to wait for another day, I believe 
we can take some modest, commonsense steps, and that brings us to the 
Durbin-Bond amendment, which answers a major question that consumers, 
including me, and small businesses have raised. It answers the question 
of whether merchants can provide consumers a discount if the consumer 
chooses to use cash instead of credit. Current law permits cash 
discounts, but in practice it is difficult, at best, for merchants to 
offer this option due to confusion about the rules. Our amendment would 
ensure that cash discounts could be offered to consumers, and it would 
update the law so consumers can receive a discount for using debit 
cards, along with cash and checks, when making purchases.
  It is also important to clarify some misconceptions about our 
amendment. First, contrary to what some poorly informed lobbyists have 
said, the language doesn't allow merchants to discriminate between 
certain brands or types of credit cards. It doesn't allow merchants to 
cut special deals with certain credit card issuers. This means the so-
called ``honor all cards'' rule would be preserved and community banks 
and credit unions would not be unfairly affected.
  To be clear, I strongly support our financial institutions that 
played by the rules and didn't participate in irresponsible and risky 
lending practices in recent years. That is why I was a strong supporter 
of the Dodd-Crapo-Bond language that raised the FDIC's line of credit 
so that community banks did not have to pay higher fees to support the 
deposit insurance fund.
  Second, the amendment language doesn't allow merchants to surcharge 
customers for using credit cards. In other words, the price displayed 
on products must be honored, and merchants can only provide discounts.
  Third, and most important, this amendment doesn't harm consumers. In 
fact, this amendment is structured with most consumers in mind. 
Consumers will benefit from this provision since they will be given the 
ability to receive a discount for using less costly forms of payment 
and preserves the convenience of using all forms of payments. I believe 
that makes it a win-win for comsumers.
  Let me be clear so that there is no misunderstanding. This is not an 
interchange provision. This amendment doesn't allow surcharges. It 
doesn't give unfair competitive advantage to large banks at the expense 
of community banks and credit unions. It is not limited to the two 
largest credit card companies, MasterCard and Visa. Most important, 
this amendment won't harm consumers and the economy. In fact, the Bond-
Durbin amendment is pro-consumer and pro-small business.
  While we were unable to address interchange, I emphasize that the 
Durbin-Bond amendment represents a breakthrough. It also represents our 
good faith effort to work openly and constructively with all concerned 
parties with the goal of finding common ground on the issue. I continue 
to hope that stakeholders will make a good-faith effort to provide us 
hard data and information to help us understand better the interchange 
issue.
  I am a strong believer in the private markets. But Missourians and 
other taxpayers across the Nation, as well as policymakers and experts, 
have significant questions about our private markets given the credit 
crisis that is at the root of the economic downturn. We cannot afford 
to take things at face value. Taxpayers deserve greater oversight on 
financial and business matters so that taxpayers are not asked to bail 
out irresponsible businesses, and small

[[Page 12460]]

businesses do not feel that Government policy is unfairly weighted 
toward ``too big to fail'' companies.
  This amendment is a small but important step. It helps Americans save 
money at the store. It gives American families more choices when they 
are checking out at the supermarket or cafe. It makes sure small 
businesses understand the rules and provides them some financial 
relief. It will provide immediate stimulus, since this is equivalent to 
a modest but broad tax break. I extend my appreciation to Senator 
Durbin and his staff for their collaboration and cooperation in 
developing this amendment.
  I strongly urge my colleagues to support the Durbin-Bond amendment, 
which is endorsed by small business groups and consumer groups.
  I thank the managers and I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. I thank my colleague from Missouri. He is absolutely right. 
The interchange fees are a tremendously important issue. We have put 
in, at the urging of Senator Corker on our committee, a thorough study 
of the interchange issue. It is complicated, and the Senator is 
correct. Among small businesses, this is a very onerous area and we 
need to address it.
  I thought we needed to understand the fullness of the issue, so we 
talked about the study. Senators Durbin, Bond, and others have a 
proposal that touches on the interchange issue. We are working with 
them to see if we can reach an agreement on that. We will make an 
effort to do that. I thank the Senator for his comments.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DODD. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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