Give Al and George some credit --
they are talking about your money
By Holden Lewis • Bankrate.com

George W. Bush's single biggest source of campaign money comes from a credit card company. Al Gore's No. 2 source of campaign money comes from another credit card company.

Now, so far the two major candidates have spent a lot of time talking about education and prescription drugs for Medicare enrollees. They have paid some attention to subjects that we write about at Bankrate.com -- banking, debt, personal finance, privacy.

But credit cards?

Neither candidate has had much to say about the business practices of credit card issuers. Don't bet your life's savings that the major-party candidates will chide credit card issuers for $29 late payment fees, misleading interest-rate advertising, rude customer service and "risk-based pricing."

Both candidates stand fearlessly for Mom, apple pie and affordable interest rates. On issues such as housing, predatory and payday lending, and community reinvestment, the Democratic and Republican candidates say pretty much what you would expect: Gore and Joseph Lieberman prefer more government regulation and Bush and Dick Cheney prefer market forces to work things out.

Privacy
Privacy, financial as well as medical, could become a hot issue. Both parties address it in their platforms and stand ready to bash each other over their privacy stands. Gore and Bush both favor more regulation to protect people's privacy, but for different reasons.

Bush joins a vocal wing of the Republican Party that sees privacy as an important property-rights issue in which individuals own information about themselves. Gore tends to view privacy more as a safety issue in which government protects people from unscrupulous businesses, stalkers and identity thieves.

The passage of last year's financial modernization law, which allowed banks, brokerages and insurance companies to merge, was preceded by a lively debate over privacy. Conservative Republicans and liberal Democrats wanted to require businesses to get customers' permission before sharing personal information between businesses. In other words, they wanted consumers to "opt in" to information sharing.

Those members of Congress lost the argument. The law contains "opt-out" language instead, allowing businesses to share a consumer's personal information unless that consumer forbids it.

Generally, an opt-in policy protects privacy more than an opt-out policy. Bush tends to be more of an opt-in guy and Gore tends to be more of an opt-out guy.

In May, Bush told Business Week: "I'm a privacy-rights person. The marketplace can function without sacrificing the privacy rights of individuals."

That means, Bush added, that "customers should be allowed to opt in" to information-sharing among companies: "The company has got to ask permission."

Gore wants to allow businesses to share most consumer information unless a consumer opts out. But he wants to impose an opt-in policy for medical data or "detailed information about a consumer's personal spending habits." It would be up to Congress, regulators and the courts to define what that means.

Housing
Both candidates stand firmly for sunny days, cute babies and homeownership, which they invariably call "the American dream."

They say they want to keep interest rates down so people can afford to buy houses. They disagree on whose policies will keep interest rates down.

To encourage low-income families to buy houses, Bush wants to convert rental vouchers into down payments. The federal Section 8 program provides rent subsidies to the poor. Bush wants to allow these families to apply a year's worth of their Section 8 subsidies toward down payments for houses, then rely on Section 8 vouchers for up to five years to help make mortgage payments. "It makes a lot more sense to help people buy homes than to subsidize rental payments forever," he says.

Gore has said he wants to continue the Section 8 program.

Gore also has said he would oppose any attempt to weaken the Community Reinvestment Act, which requires banks to make credit available to low-income borrowers. Ironically, Gore supported passage of the financial modernization law, which weakened the Community Reinvestment Act.

He might support expansion of the CRA to include not only banks but also mortgage companies, brokerages and insurance companies. He says those businesses might need "new incentives" to invest in poor neighborhoods. Bush says he wants to make the CRA less burdensome to banks and that he does not favor extending CRA requirements to mortgage companies, brokerages and insurers.

Insurance, payday lending, bankruptcy ... and more
Although the Clinton administration opposes a proposal to double federal deposit insurance to $200,000 per account, Gore has not ruled out the idea and says it merits a closer look.

Lieberman has been one of the Senate's most vocal foes of payday lending, in which people short of money get short-term, high-interest loans backed by future paychecks.

Bush proposes "Individual Development Accounts," bank accounts for poor people who don't necessarily have checking or savings accounts. An Individual Development Account would be a savings account in which the bank, using a federal tax credit, would match up to $300. Money in the account could be withdrawn tax-free to pay for education, a house down payment or to help start a business.

Gore wants to encourage credit card companies to deny cards to parents who are far behind on child-support payments.

Both candidates have been silent on bankruptcy reform. A bill to revise bankruptcy law has bogged down in Congress. The bill would require more bankrupt filers to pay at least some of their debts instead of walking away from them. Experts debate the wisdom of tightening bankruptcy laws, and neither candidate has weighed in.

Banks and the credit card industry eagerly want bankruptcy reform. Consumer finance businesses gave $6 million to political candidates and party-building activities in the first half of 2000.

Many banks and credit card issuers charge a $29 fee if you pay your bill late or bounce a check. The $6 million in political contributions translates into almost 207,000 bounced checks and late payments.

Contributions (are those my dollars?)
Many of those dollars went to the Bush and Gore campaigns. According to information compiled by the Center for Responsive Politics, as of Sept. 1 the top contributor to the Bush campaign is MBNA America Bank and its employees. MBNA, the nation's third-largest credit-card issuer, had given the Bush campaign $220,275 (the equivalent of 7,595 late-payment fees of $29 each).

Gore's second-largest contributor (behind the accounting firm of Ernst & Young) is Citigroup, the nation's biggest bank holding company and the largest credit-card issuer. Citigroup and its employees gave the Gore campaign $102,250 (3,525 late fees). No. 16 on Gore's list is Morgan Stanley, Dean Witter & Co., which issues the Discover Card and contributed $43,300 (1,493 late fees).

Morgan Stanley plays both sides of the fence and gave Bush $137,150 (4,729 late fees), the campaign's sixth-largest source of donations. Bush has collected $105,600 (3,641 late fees) from Citigroup and a similar amount from Bank of America, the nation's second-largest bank holding company.

Neither candidate has taken on the credit card industry the way Green Party candidate Ralph Nader has. Nader not only has called for a credit card bill of rights for consumers, but tangled with MasterCard over a priceless political advertisement.

The TV ad, which parodied MasterCard's familiar "Priceless" formula, drew a lawsuit from MasterCard, which complained of trademark and copyright infringement.

"They should lighten up," the normally somber Nader said. "They're taking their name 'Master' too seriously."

--Posted: Sept. 29, 2000