Give Al and George some credit
they are talking about your money
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,
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
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, 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.
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
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
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
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
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
--Posted: Sept. 29, 2000