A state senator has rejected a banking industry bid to revise her bill banning "universal default clauses" that enable some credit card companies to boost interest rates if a customer misses a payment on a completely separate account.
Senate Minority Leader Dina Titus, D-Las Vegas, said Tuesday she
talked with banking lobbyists who wanted changes in her SB302 but
"the more they messed with it the worse it got. So I said, 'No amendments."'
SB302 already has won Senate approval and is scheduled for a final vote Friday in the Assembly. With approval in the Assembly, the measure would move to Gov. Jim Gibbons for his signature.
Titus said the lobbyists weren't trying to alter the main goal of her bill, which is to stop interest-raising tactics by some credit card companies that she has described as "outrageous and unbelievable."
Titus added that the banking lobbyists now are looking for another bill that might be amended to preserve a separate industry practice of changing customers' interest rates if their credit scores decline. That practice wasn't targeted by Titus, but she said the lobbyists feared her bill might be interpreted broadly to include it.
SB302 goes after the "universal default" clauses that can result in interest rates spiking 30 percent or more based on tracking outside accounts. Titus said most cardholders aren't even aware of the clauses.
Her bill had been endorsed earlier by Bill Uffelman of the Nevada Banking Association, who said the practice of tracking outside accounts in interest rate-setting has fallen out of favor, and isn't used by any of his member banks.
Several large banks, including Citibank and Chase, recently rolled back or eliminated universal default clauses due to political pressure in Congress. At least five bills are pending in Congress that would further tighten regulations on credit cards.
SB302 would let a card company consider its own internal accounts showing, for example, payments on a car loan made by someone using the credit card issued by that company, when setting interest rates.
The bill also bans credit card companies from preventing merchants from offering discounts to customers who use cash.
If the bill passes, Nevada would join a handful of states that have banned universal default clauses. Many Nevada consumers still wouldn't be protected since the U.S. Supreme Court has ruled that
states can't regulate banks that are based out-of-state - and most
cards are issued by those banks.
(Copyright 2007 by The Associated Press. All Rights Reserved.)