WASHINGTON -- Top Bush administration officials joined U.S. bankers yesterday in condemning the Senate's move to cap credit-card interest rates, with Treasury Secretary Nicholas F. Brady denouncing the "wacky" legislation and Vice President Dan Quayle saying the president would veto it if necessary.
Their attacks came on the heels of complaints by bankers that as many as 60 million Americans might lose their credit cards and that the economy could turn even worse if the legislation became law.
Mr. Bush himself had publicly urged lower credit-card rates in a speech last week. But he stopped short of seeking a legislated cap on rates, and the Senate's subsequent GOP-led move has alarmed banks, the White House and, the administration says, Wall Street investors.
Mr. Brady blamed Friday's 120-point stock market drop, its worst in two years, on last week's Senate vote imposing a floating ceiling on credit-card interest rates.
"I don't expect that legislation ever to see the light of day and I think the market will understand that," Mr. Brady said yesterday on NBC's "Meet The Press."
"I think the legislation that was passed earlier in the week with only 30 minutes' discussion disturbs people who think about the market."
"In other words, they expect our governmental bodies to be considered, quiet and sensible. This is wacky, senseless legislation, and when it goes through quickly, people wonder."
Mr. Quayle, on ABC's "This Week with David Brinkley," said he was "confident that the president will make sure that this does not become law, and if that requires a veto, so be it."
Their comments coincided with the bankers' threats.
According to Associated Press reports, the American Bankers Association estimated that nearly half the nation's 120 million MasterCard and Visa users would lose their cards. The ABA said that those who keep their cards could face sharply reduced credit limits, higher annual fees and loss of the standard 25-day grace period before interest is applied, the group said.
"This legislation that's proposed would have a devastating negative impact on the economy, on the financial system, and would just exacerbate the recession," Philip Corwin, the group's director of operations and retail banking, told CNN's "Newsmaker Saturday" program.
The Senate legislation, which passed with a wide bipartisan majority, would cap rates at 14 percent, well below the 19 percent average credit card interest rate.
It was spurred both by the drive to pick up the economy by getting consumers to spend more and the complaint expressed by cardholder groups over high interest rates.
"Working-class taxpayers are being called on to bail out the banks for the bad loans that they have made," Sen. Alfonse M. D'Amato, R-N.Y., sponsor of the legislation, said in a television interview.
The bankers' Mr. Corwin said the legislation "has a lot of political appeal because congressmen would like to give away our profits to appeal to the voters.
But there's also a lot of appeal for passing a bad bill and forcing the president to veto it."
Mr. Quayle predicted the stock market drop and other factors will force Congress to drop the idea.
"Congress likes to have both sides of an issue, and this is a perfect case for them, because now they're on record one week supporting a cap, and the next week, they'll say, 'Oh, well, we really didn't want to have the stock market react like this.' "