May 19, 2010 / 11:49 PM / in 8 years

US Senate rejects state limits on credit card rates

WASHINGTON, May 19 (Reuters) - The U.S. Senate rejected a proposal on Wednesday that would have allowed states to limit credit-card interest rates as part of a sweeping overhaul of financial regulations.

The 35 to 60 vote was a victory for large banks that have already suffered several legislative defeats in the biggest rewriting of Wall Street rules since the 1930s.

    The amendment would have allowed states to enforce usury caps on the interest rates charged by credit-card issuers located beyond their borders.

    Many states have laws on their books that cap interest rates far below the punitive rates some issuers charge delinquent borrowers, but they do not apply to out-of-state lenders.

    National credit-card issuers such as JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) base their credit-card subsidiaries in business-friendly states such as Delaware and South Dakota that do not limit interest rates. (Reporting by Andy Sullivan; editing by Andrew Hay and Andre Grenon)

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