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Sen. Harkin Banks can take a lesson from CUs
WASHINGTON (5/14/09)—Sen. Tom Harkin (D-Iowa) on May 13 suggested that banks could “take a lesson” from credit unions that have been able to provide a “viable, good service” to millions of Americans without harming the safety or soundness of their institutions. In remarks delivered on the Senate floor, Harkin said that larger credit card issuers and banks should be able to operate under potential federal interest rate restrictions, as credit unions have been able to thrive under similar rules without negatively impacting access to credit for credit union members. While he supports the overall goal of H.R. 627, the Credit Cardholders' Bill of Rights Act, the legislation as currently presented does not address the larger problem of “usurious” interest rates, Harkin said. An amendment that would have imposed a 15% interest rate cap for credit cards was defeated late Wednesday afternoon. However, Sen. Chris Dodd (D-Conn.) said that the concept of an interest rate cap for credit cards should still be considered by the Senate. The Federal Credit Union Act imposes a 15% ceiling for all loans and lines of credit advances that are serviced by federal credit unions, but it allows the National Credit Union Administration (NCUA) to make adjustments up to 21%. Currently, the federal regulator has set the rate at 18% and is scheduled to reconsider the cap on Sept. 10, or it will revert to 15%.


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