Senate approves tougher credit card rules in 90-5 vote

The Senate on Tuesday voted overwhelmingly to impose tough new restrictions on the credit card industry, which had spent years successfully avoiding regulations.

The 90-5 vote was a turnaround from the last session of Congress, when a similar bill that passed the House languished in the Senate without a companion measure.

{mosads}This year, with the White House taking up the call for greater regulation, the industry found itself facing a barrage of criticism that it could not overcome.

The bill heads back to the House for a vote this week to finalize differences and will likely head to President Obama’s desk by the weekend.

What might have been a bruising partisan battle turned once Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.) agreed to compromise legislation this month. The vote contrasted with an earlier measure that passed the Senate Banking Committee without Republican support and with only one Democrat in opposition.

The bill bars firms from hiking interest rates on cardholders unless they are 60 days late in payment, bans “double-cycle billing” and seeks better notification for consumers. The bill goes a step further than rules the Federal Reserve issued in December, but that won’t take effect until July 2010. The Senate bill would take effect nine months after it is signed into law.

The Senate voted in favor of the bill even as it included an unrelated amendment allowing guns in national parks. The House will take up the bill this week and could avoid a conference committee.

Five senators voted against the bill, including Republican Sens. Lamar Alexander (Tenn.), Bob Bennett (Utah), Jon Kyl (Ariz.) and John Thune (S.D.). Sen. Tim Johnson (S.D.) was the lone Democrat in opposition; South Dakota has significant banking and credit card interests.

The banking industry criticized the vote, arguing that the bill will hamper the availability of credit to consumers and could increase costs for cardholders with better credit histories. “We are concerned that the Senate bill will have a dramatic impact on the ability of consumers, students and small businesses to obtain and use credit cards,” said Edward Yingling, president of the American Bankers Association.

Four senators did not cast votes: Sens. Edward Kennedy (D-Mass.), Robert Byrd (D-W.Va.), John Ensign (R-Nev.) and Jay Rockefeller (D-W.Va.).