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Connie Prater

Credit cards and the gentleman from Delaware

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.

Strange bedfellows?
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."

See related: Biden part 2: From a banking state, but it didn't pay off3 presidential candidates; 2 credit card reform plans

6 Comment(s)

Tom Ferro said:

Sen. Joe Biden was never employed by MBNA or Bank of America (which acquired MBNA). It was his son Hunter who worked in the legal department for a couple of years. Later, Hunter worked as a consultant to MBNA. Sen. Biden was in the Senate long before MBNA was founded and couldn't have worked there at any point while serving in the Senate.


Duly noted and corrected. It was Biden's son who worked for MBNA.


The credit card industry may feel Biden is more valuable to them as a senator rather than as VP.


Lu Ann Sherman said:

Dear Joe,

Being from Delaware, has been my only concern about you, ever. With ill health, a limited amount of working years left (no time left to prepare for retirement), and all doors of debt relief being closed--not good. A Chapter 13 bankruptcy is so costly that it's beyond consideration & offers no real relief, only shot credit. Not eligible for a Chapter 7, which would offer some relief, but due to our new draconian bankruptcy laws, don't qualify. Feel frantic & don't trust you to push forward with bankruptcy legislation that is fair to the consumer--because you are from Delaware. Say it ain't so, Joe. As Vice President, buck the trend of allowing the banking industry to be the true employers of our goverment representatives. Even though you are from Delaware.


Cindy Anderson said:

WE the taxpayer are giving a break to one of the very companies that has refused for years to treat its customers fairly, Citibank. And we the taxpayer are paying for their break. It disgusts me.


Gary M Franklin Sr said:

The state of Delaware protects CREDIT CARD COMPANIES, LIKE THE ""HOLE IN THE WALL"" in Wyoming PROTECTED BUTCH CASSIDY AND THE SUNDANCE KID FROM PROSECUTION. Elected Crooks in Washington D.C.


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