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Well, the waiting is finally over. Presumptive Democratic presidential nominee Barack Obama has named Sen. Joseph Biden his vice presidential running mate. Both will make their best arguments this week during the Democratic National Convention in Denver for why the Obama-Biden team should lead us through the next four years.
I have to admit that when I heard it was Biden who got the nod for VP running mate and that he was a long-time Delaware senator, I couldn’t help but wonder where the Obama-Biden ticket would stand on credit card industry reform.
Obama came out months ago in support of credit card reform in the form of a five-star credit card rating system and a Bill of Rights for credit cardholders. He supports bans on unilateral changes to credit card agreements, interest on fees, universal default and retroactive application of interest rate hikes to credit card balances. Obama also supports bankruptcy law reforms and capping payday loan interest rates.
Biden was first elected to the Senate in 1971 and no doubt has spent more than three decades getting financial support from the banking interests that call Delaware their home.
According to the New York Times, Biden was seen as so close to MBNA, the credit card company that was purchased by Bank of America, that he was referred to as the “senator from MBNA.” Instead of the standard senate designation (D-Delaware), he was (D-MBNA).
The Times notes that Biden’s son Hunter was actually employed by MBNA and that the senator had close ties to MBNA executives: “Employees of MBNA Corporation had heavily contributed to Mr. Biden, pouring more than $214,000 into his campaign coffers going back to 1989, making the company his single biggest supporter, according to the Center for Responsive Politics,” according to the Times.
Biden supported passage of the 2005 Bankruptcy Abuse Reduction Act while Obama voted against the measure. The banking industry lobbied heavily for passage. But consumer advocates have criticized the law because it has meant financially distressed consumers must wait longer and go through more steps before they can seek protection from their creditors.
Ripples already starting
Obama is already getting flack from the Biden-MBNA connection. According to a Sunday Times article, Obama aides are spending time defending work by Biden’s son, a lawyer and lobbyist, for MBNA.
It makes you wonder how the conversation between Biden and Obama went regarding the credit card reform issue — or if they discussed it at all. On paper at least, it seems the two are on opposite poles. How will Biden carry the credit card reform torch for the ticket? Or will the torch grow a little dimmer with Biden’s influence?
Linda Sherry, national priorities director for Consumer Action, the San Francisco-based consumer advocacy group, writes:
“I think it is a very good question. Biden, coming from Delaware, is obviously very interested in the economy in his home state, and credit card companies are prominent employers and taxpayers there. But I don’t think the answer is so easy. We haven’t really seen a vote on credit card issues in recent years in the Senate, so it’s difficult to say how Biden would stand. We can look to his votes on bankruptcy reform and limiting class actions as a pointer, perhaps. From a consumer advocacy standpoint, he seems to have a subtle bias in favor of the industry.
“I still think Obama will support credit card reform, despite all of this. But even though credit card reform is a pressing agenda item for advocates and many consumers, I am not sure it is going to be the top item on his list.”
Chi Chi Wu, staff attorney for the Boston-based National Consumer Law Center, adds this:
“While some might think about what legislation would be on the agenda of an Obama-Biden administration, one of the most critical roles it would have is its selection of appointees for the regulators that govern the credit card industry, such as the Federal Reserve Board and Office of Comptroller of Currency.
“The Fed was the agency that in May 2008 issued a strong credit card protection proposal. The OCC supervises national banks — many of the major credit card companies are national banks. Depending on the appointees, protections could be strengthened — or rolled back.”