The Day the Senators Decided to Slap Price Controls on Money

GEORGE F. WILL

November 20, 1991|By GEORGE F. WILL

WASHINGTON — Washington. - The descent of American politics into parody accelerated when the Senate, which fancies itself World's Greatest Deliberative Body, voted 74-19, without anything that could be dignified as deliberation, to put price controls on money.

Our legislators have now had second thoughts -- first thoughts for some -- about what they did concerning credit card interest rates. But before it fades from memory, study it as evidence of how we are governed.

The debacle began when President Bush, who thinks Americans should have more ''confidence,'' demonstrated one reason they do not: feckless leadership. He urged banks to lower credit card rates, his evident assumption being that recovery will result from more consumer installment debt.

Mr. Bush said that at a Tuesday lunch. Wednesday afternoon, the stampeding Senate voted for a ''floating cap'' on rates, pegged 4 percent over IRS charges for underpayment of taxes. The Senate says 14 percent is the correct rate for today.

The author of this measure is Alfonse D'Amato, R-N.Y., which is not surprising. He is a publicity-mongering practitioner of smash-and-grab opportunism. He could not be trusted to run a lemonade stand but says he knows just what bank profits are ''fair'' and ''comfortable,'' what rates are ''reasonable,'' ''adequate,'' ''equitable'' and ''appropriate,'' and he knows banks are ''gouging'' and ''ripping off'' credit card customers in TTC ways that are ''shocking'' and ''usurious.''

''I do not want to try to allocate credit,'' he said while trying to correct what he calls an ''inappropriate allocation.'' His ravings must be read to be disbelieved:

''It is absolutely unconscionable that credit card issues (sic) be allowed to put their burden on the American people, while we sit back on the altar of what has become a political sloganeer (sic). We say let the free market system work. The free market system is obviously not working.''

Mr. D'Amato said today's rate (the actual average is 18.9 percent) ''is wrong and it approaches those areas that the Bible has said you should not charge interest.'' He praised himself for having ''the courage to stand up to special interests'' and ''for the little guy, the working middle class, the guy . . . who is being told, oh, shop around for credit. You try and shop around for credit.''

For the likes of Senator D'Amato, language is just noise, &L signifying nothing but auto-intoxication: ''There is no competition. Indeed, there is a conspiracy of silence, of acquiescence.'' Meaning? Nothing, as Sen. Jake Garn, R-Utah, demonstrated when he injected a foreign substance -- fact -- into the discussion.

With the patience necessary when addressing the dim-witted but which is unavailing when the dim-witted are also cynical, Mr. Garn noted that credit cards do not have secured backing and have high default rates. They are costly to administer and the high rates -- high relative to, say, mortgage rates -- subsidize credit for those who are least creditworthy. Those people will be denied cards if politicians set rates.

Senator Garn said he shopped around for his card from a bank charging 12.5 percent. He offered Senator D'Amato a list of banks charging seven or more percentage points less than the 18 to 19 percent that Mr. D'Amato thinks are the only rates available.

Sen. Don Riegle, D-Mich., had the brass to praise Senator D'Amato's measure because ''credit card companies ought to be more discerning.'' Senator Riegle says, ''they sometimes offer a line of credit to a borrower who is not going to be able to repay it.'' Mr. Riegle is Charles Keating's helpful friend.

If it becomes law, Senator D'Amato's measure would indeed cut credit, and bank profits. These are two ideas your Congress considers timely.

The Senate, said George Washington, is the saucer into which we pour our passions, and legislation, so they can cool. That was then. This is now: Senator D'Amato is an intellectual featherweight disdained by his colleagues for his coarseness and recklessness, but last week they became his rabble.

This year he wants government to allocate credit. Next year he will run for re-election, preening about his conservatism. A majority of Republicans voted with him. Nineteen senators did not. They deserve mention: Bingaman, Brown, Coates, Daschle, Garn, Glenn, Gramm, Hatch, Heflin, Helms, Lugar, Mack, McConnell, Nunn, Pressler, Rudman, Smith, Symms, Wallop.

The irrepressible Joe Biden, D-Del., popped up to say Mr. D'Amato's idea is bad but he would support it. He said ''legislative caps of this sort are neither proper nor workable'' and he expects the measure will be dropped by the House-Senate conference, but he would vote for it as a ''signal" to bankers that Americans are "concerned" about rates and "it is time to give the middle class a break.''

This is known as ''jawboning.'' Or, to maintain the Biblical tone, it is an attempt to to pound down rates with the jawbone of an ass -- of 74 of them.

George F. Will is a syndicated columnist.

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