Jun 24, 2009

Who Killed Small-Business Credit Card Protection?By Robb MandelbaumBoss.Blogs.NYTimes.com

Often, when legislation dies on the Senate floor, you know who did it in. But when Senator Mary Landrieu, Democrat of Louisiana and chairman of the Senate Small Business Committee, tried, and failed, to get new consumer credit card protections extended to small businesses last month, the perpetrator — or perpetrators — left no fingerprints. In fact, there’s no agreement on what precisely happened, or why. The Congressional Record is ambiguous. And no senator, Democratic or Republican, has explained on the record why small businesses were left behind when the Credit Cardholders’ Bill of Rights Act of 2009 became law on May 22.

Senator Landrieu’s amendment had two provisions. First, it would have explicitly extended the definition of a consumer entitled to protection to include individuals who use their personal credit cards for business purposes (limited to businesses with fewer than 50 employees). Secondly, it would have extended consumer protections to cards directly held by a small business.

You might have thought it would be a smooth ride to passage for such an amendment: The underlying legislation was wildly popular (it ended up passing the Senate 90-5), and small business is practically sacred on Capitol Hill. Moreover, as Andrew Martin reported in Friday’s Times, small firms are facing higher interest rates and much lower credit limits on their company cards. So what happened, and why? And what are the legislation’s prospects now?

The National Small Business Association, the chief advocate for the amendment, had originally shopped it to Senator Dodd’s Banking Committee, where it got a chilly reception. “It just wasn’t something they thought about, and they weren’t really hearing about it from anyone other than us,” says Kyle Kempf, the association’s advocate on the issue. The principal objection, according to Senate aides in both parties, was that the Banking Committee had not studied the implications on credit markets of extending protections to small-business cardholders. (All of the Senate aides and one lobbyist interviewed for this story insisted on anonymity.)

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