You-Won’t-Get-A-Credit-Card-Unless-You’re-Rich Bill Passes Senate

People with good credit will soon be forced to pay more to subsidize people with bad credit.

That’s because the U.S. Senate overwhelmingly passed legislation Tuesday that puts the screws to credit card companies by limiting their ability to price their products according to risk.

Passage in the Senate by 90 to 5 votes came after the House approved separate legislation on the same topic by a margin of 357 to 70 on April 30. The two chambers are expected to work out the differences on their competing bills in time for President Obama to sign a measure into law by the Memorial Day congressional recess.

Tom McMahon, acting executive director of liberal group Americans United for Change, has tried to shame Republican lawmakers into voting for the anti-market bill. “The Limbaugh-led Republican Party [which has] repeatedly said no to get the economy moving again … will have another opportunity to do the right thing.”

Of course McMahon makes no effort to explain how kneecapping credit companies will help to stimulate the economy.

According to Edward L. Yingling, CEO the American Bankers Association, provisions in the legisation “will undermine the availability of credit.” Credit cards are “a strong economic driver and are relied upon by consumers and small businesses to make payments and to bridge short-term financial gaps,” he said.

Yingling said the legislation “fundamentally changes the entire business model of credit cards by restricting the ability to price credit for risk.”

As John Berlau of the Competitive Enterprise Institute noted when the House passed its version of the legislation three weeks ago, limiting consumers’ choices and interfering with sensible risk-based pricing practices “will result in less availability of credit and actually force card holders to pay higher rates in many instances.”

The attack on the credit card industry was funded in part by left-wing philanthropist George Soros through his foundation, the Open Society Institute, as shown in “Consumers and Credit Cards: Leftist Watchdogs Attack An American Success Story,” by Sara Wille, Foundation Watch, September 2006. (A related article is “Demonizing Subprime Lenders: Liberal Groups Oppose Consumer Choice,” by Melanie Sans and Matthew Vadum, Organization Trends, October 2007.)