Campaign Contributions from Credit Card Companies? PricelessThe presidential contenders have largely remained mum on the mounting consumer debt crisis. Are they afraid to cross their largest campaign donors?
Even so, today the credit card business remains virtually unregulated at the national level. Companies can charge—or change—interest rates at will. And while the companies may be regulated at the state level, two states, South Dakota and Delaware, have consumer protection laws so weak that credit card companies simply set up shop there and run their operations from these safe havens.
To make the situation worse, the new bankruptcy law that went into effect in 2005 makes it much harder to declare bankruptcy, and requires filers, including those with very modest incomes, to pay off much of their credit card debt regardless. Initiated in 2001, the law was vigorously opposed by consumer groups and unions, but championed by the president, whose largest campaign contributor had been the credit card giant MBNA (which subsequently merged with Bank of America). On an initial vote in 2001, it also won the support of 36 Senate Democrats, including current presidential candidates Joe Biden, Hillary Clinton, and John Edwards, while only Chris Dodd voted against it (as did Dennis Kucinich in the House).
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Obama, who made a strong floor speech in opposition to the 2005 bankruptcy bill, nonetheless voted against a key amendment that would have put a cap of 30 percent on interest rates. Financial firms, according to Ken Silverstein's much-discussed Harper's article "Barack Obama Inc.," "constitute Obama's second biggest single bloc of donors." You'll find nary a word about the debt crisis on his campaign web site.
Hillary Clinton, who receives large sums of money from banks and investment companies, has waffled on the issue. In the The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, Harvard law professor Elizabeth Warren recounts a 1998 meeting with Clinton, who was then First Lady. Clinton wanted to know more about credit cards and how they affected women and Warren, a leading critic of credit card company practices, gave her a short lecture over lunch, focusing on the drawbacks in an earlier version of the new bankruptcy legislation (which Bill Clinton and the White House staff were quietly supporting in hopes of wooing the banking industry). Warren writes that after their talk, Hillary promised to do what she could to stop the "awful bill." And, by the time the legislation passed Congress in 2000, Bill Clinton had changed his position and vetoed it. An aide later told Warren, "A couple of days after Mrs. Clinton met with you, we changed sides so fast that you could see skid marks in the hallways of the White House."
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