Rhode Islanders have grown accustomed to a certain amount of silliness in the General Assembly. It was only a few months ago that members of that august body were debating the merits of an official state ice cream.And just last week, it seemed, the legislature had taken the inanity to new heights. The state Senate, in a harried rush toward recess, approved a cap on interest rates for credit cards issued by Ocean State lenders even though — you guessed it — not a single credit card lender is incorporated in Rhode Island.
So, has the legislature reached a new height of absurdity?
Well, perhaps not. As it turns out, if the Senate bill is signed into law, Rhode Island will join more than 20 other states that have already implemented interest rate caps on credit card lenders.
Nearly all, like Rhode Island, do not have behemoth credit card concerns like Citibank, American Express, or JP Morgan Chase within their borders. And that, of course, makes it easy to pass the measures — no major donors to piss off.
But if the bills were not exactly heavy lifting, they sent an important message to Congress.
In the midst of the economic downturn, federal lawmakers have turned up the heat on some elements of the financial industry. But Washington's blow to an out-of-control credit card industry — the Credit Card Accountability, Responsibility, and Disclosure Act (Credit CARD), passed in May — is something less than satisfactory.
The act uses federal authority to curb some of the sneaky practices credit card companies currently use to drain debt strapped cardholders, but it stops short of capping interest rates — leaving it to states like Rhode Island to keep the cause alive.
There was token Republican opposition to the Ocean State bill, with the GOP's tiny caucus deriding the legislation as unnecessary and arguing that it will repel credit card lenders who might consider moving to the state. And those sorts of concerns could play bigger in other legislatures.
But if the push to cap exorbitant credit card interest rates is to gain momentum, even more states are going to have to jump onboard. Only then, it seems, will there be a chance to loosen the noose on indebted cardholders.
