S.D. senators wary of credit card reform plan

May 14, 2009

LEDYARD KING
Argus Leader Washington Bureau

WASHINGTON - Both of South Dakota's senators are expected to vote against a sweeping credit card reform bill unless significant changes are made to protect industry jobs in the state.

Democrat Tim Johnson and Republican John Thune told reporters Wednesday they've been talking with Senate banking committee leaders about the need to ensure that the roughly 20,000 workers in South Dakota tied to the industry don't lose their jobs.

"I'm hopeful that there will be language that protects South Dakota jobs," Johnson said. "This is a bipartisan bill, so the possibility of blocking this is not great."

Johnson and Thune sided with 58 other senators Wednesday in a procedural vote against an amendment to cap interest rates on credit cards at 15 percent.

The Senate bill is considered to have stronger protections for consumers than legislation that passed the House last month and than Federal Reserve regulations that would take effect July 1, 2010.

It would give consumers 45 days' notice before rate increases and allow them to pay by phone without additional fees. It would prohibit rate increases in the first year after an account is opened, prohibit interest charges on paid-off balances from billing in the previous cycle and protect young people from aggressive solicitations.

President Obama strongly supports credit card reform and wants legislation on his desk by Memorial Day weekend.

Thune, Johnson and Rep. Stephanie Herseth Sandlin, the lone Democrat to vote against a House credit card reform bill last month, say the Federal Reserve rules should be given a chance to take effect because they were crafted after years of careful study and treat both lenders and borrowers fairly.

Thune said the plan in Congress is "swinging the pendulum too far in one direction. It will put a lot of jobs in South Dakota in jeopardy if it passes in its current form. We're trying to work with the sponsors of the bill to see if we can get some of those issues addressed."

The three members of South Dakota's delegation also say the Senate and House versions would penalize responsible consumers and restrict access to credit at a time when America's struggling economy needs a boost.

Contributing: Nicole Gaudiano, Gannett Washington Bureau. Contact Ledyard King at lking@ gannett.com.