Interest rate cap sought for plastic

DURHAM -- They haven't gotten the 10-percent cap on credit-card rates they want, but activists in North Carolina and beyond are making some progress.

Following a rally in Charlotte last month, Wachovia officials agreed to meet with organizers from the N.C. Industrial Areas Foundation and are now negotiating on a proposal to limit interest rates for military veterans and to restructure at-risk mortgages to avoid foreclosures.

This week, IAF sent its latest proposal to Rodrick Banks, Wachovia's community-development officer for Charlotte and Western North Carolina. Banks was unavailable for comment. Christine Shaw, a Wells Fargo spokeswoman in Charlotte, said only that the dialogue was continuing.

"We'll see what kind of reaction we'll get," said Durham-based IAF organizer Gerald Taylor.

The 10-Percent Is Enough campaign invokes traditional religious usury laws aimed at protecting borrowers from permanent debt. The movement, which kicked off in Durham, Boston, Chicago, New York and London this summer, has been buoyed this month by positive comments from prominent Senate candidates and even the CEO ofCitigroup.

Last week in Massachusetts, four Democratic candidates running to replace the late Sen. Ted Kennedy told the Greater Boston Interfaith Organization, an IAF affiliate, they'd support a cap at no more than 20 percent, and the two leading candidates went further, saying they'd support the 10-percent cap.

"The American dream has been turned upside down," said Massachusetts Attorney General Martha Coakley, The Boston Globe reported.

Sens. Dick Durbin of Illinois and Bernie Sanders of Vermont tried unsuccessfully to enact rate caps on consumer credit earlier this year, Durbin at 36 percent and Sanders at 15 percent. Congress did pass the Credit CARD Act, which takes effect Feb. 22. It regulates the timing and disclosure of rate and fee increases and forces banks to apply monthly payments to the highest-rate balances first. But it stopped short of capping interest-rates.

With Congress in the throes of the health-care debate, IAF's affiliates in the Midwest and East Coast are focusing on convincing state and local governments, religious denominations and labor unions to threaten boycotts if banks don't comply.

"It will give us a lot more leverage to negotiate," said IAF organizer Arnie Graf.

A few days after the candidate forum in Boston, Citigroup CEO Vikram Pandit told the Globe his company would support a cap on credit-card rates as long as it applied to every bank and if pre-existing accounts were exempt.

"Having high rates in this environment is not conducive to driving economic recovery," Pandit said. "We're completely in support of having a rational rate structure."

Most economists think low rate caps would dry up the credit market, but Pandit told the Globe that might be a good thing, because easy credit helped to land people in debt. The CEO said Citi adopted a 10-percent rate on its cards three years ago but it didn't work because customers paid off high-rate debt first and started defaulting on their Citi debts.

Graf, who demonstrated in Charlotte last month, said this kind of response from a major executive shows the campaign resonates.

"That was the first kind of crack in the door. We think what we've been doing has been having an effect," he said. "It was gratifying. It's the bank we've been going at the most. ... It gives us legiti macy."

After the Charlotte rally last month, Bank of America Chairman Walter Massey wrote a letter to the Rev. Greg Moss, president of the General Baptist State Convention, promising IAF a meeting with Andrew Plepler, the bank's global corporate social responsibility executive.

"We truly believe that what is important to our customers should also be a top priority for us," Massey wrote.

Tammy Rodman, a 51-year-old divorcee, climbed her way out of $3,000 worth of credit card debt only to watch her daughter succumb to a credit-card offer on campus and rack up $1,600 of her own. The human-resources specialist and part-time Baptist minister went to Charlotte last month to protest those who profit off others' mistakes.

"There are people walking around here getting these huge bonuses when people are starving," she said. "God doesn't ask for no more than 10 percent."

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