Chris Dodd says he’s doing consumers a favor by pushing his nutty Credit Cardholders’ Bill of Rights, which passed the House yesterday. He’s not. If Dodd’s bill becomes law, some consumers will have a harder time getting credit cards on any terms, while others will face steeper interest rates and fees. That’s a high price we’ll all have to pay just so the Senate’s most vulnerable Democrat can hang on to his seat.
In an article yesterday on The Huffington Post, Dodd claims he’s been fighting the card lenders for twenty years, “waging what was then a lonely fight.” Actually, if you compare what the card industry looked like 20 years ago to how it looks today, you’ll be astonished at how much better a deal consumers are lately getting. And government regulation isn’t what drove the improvement; free-market innovation and competition, did. Twenty years ago, all consumers paid the same interest rate—and it wasn’t low (19.8%). Twenty years ago, everyone paid an annual fee. There were few rewards programs.
So, again, while Chris Dodd was fighting what he admits was a fruitless and lonely fight, card companies were coming up with ways to profitably deliver a better and better deal to consumers. (Some of those deals were so good, in fact, that the lenders that offered them are now out of business.) And, again, Dodd’s lonely crusade on behalf of the consumer had nothing to do with it.
But if the bill Dodd is pushing becomes law, some of those benefits will disappear. The bill would, for instance, prohibit card companies from changing the rates they charge “at any time, for any reason.” Translation: instead of a borrower’s interest rate varying up and down, it will just stay up. Or fees will rise, to offset issuers’ loss of pricing flexibility.
Dodd’s misbegotten bill would reduce competition and raise costs for the consumer—all so his office can generate press releases that say things like “Dodd Fights Card Companies.” In fact, his fight will end up hurting his own constituents. (In his Huffington Post piece, Dodd writes that his legislation “will prevent card companies from tricking customers.” If the press were better-educated on the topic, we’d also read that Dodd is trying to “trick” consumers into believing his legislation will help them, when it won’t.)
In fairness, the past year has not been kind to Dodd; I can see why he wants to change the subject. First came word he’d received a sweetheart loan from Countrywide—a company under the purview of the Senate Banking Committee, which he chairs. He has yet to provide any details about the loan, despite promises otherwise. Next was the news he’d been ably to buy a cottage in Ireland at a well-below-market price, in a deal arranged by a pal who’s also a convicted felon. Most recently, Dodd snuck language into the stimulus bill that enabled those AIG bonuses—then denied knowing anything about it.
Given all this, you won’t be surprised to learn that Dodd’s poll numbers have been sagging. One recent poll puts his disapproval rating at 58%. In the runup to his reelection bid next year, Dodd trails one potential Republican opponent by 16 points. So, yes, he would benefit from a distraction.
Unfortunately, the distraction he’s come up with, this cussed cardholder’s bill of rights, will do more harm than good for the people he says he’s trying to help.
As it happens, Chris Dodd is my Senator. But I don’t have a sense that he represents me, or has my interests at heart. (I especially didn’t feel that way when he moved his entire family to Iowa for a year when he was running for president.) He just loves the power that comes from being a Senator, and loves being a professional politician. He’s more than willing to engage in some demagoguery that actually hurts his constituents, if that’s what it takes to get reelected. Just the sort of pol, that is to say, that should be shown the door by voters next election.
What do you think? Let me know!