PROVIDENCE, R.I.—Rhode Island's junior senator is trying to harness Occupy Wall Street anger against big banks into a legislative effort to crack down on sky-high credit card interest rates he calls "grotesque."
Sen. Sheldon Whitehouse, who this week visited the Occupy protesters' encampment in Providence for the first time, introduced a bill Tuesday that would close a loophole under which credit card companies are effectively able to avoid state-level caps on interest rates -- and charge as much as 30 percent in some cases.
"This is something that has gone unchecked for far too long," Whitehouse said on the Senate floor.
Whitehouse says consumer anger is a "live issue." In an interview, he references the recent backlash over
"I'm hoping that we can take advantage of some of that interest and energy in this," said Whitehouse, a first-term Democrat from Newport who is facing reelection in 2012.
Whitehouse's bill -- which he tried unsuccessfully to attach to last year's Wall Street reform legislation -- addresses a loophole he says was created by a 1978 U.S. Supreme Court decision. The decision lets lenders charge the interest rates allowed in their home states, not in the states in which their customers live.
Whitehouse said that has prompted banks' credit card operations to establish headquarters in places like South Dakota, Delaware and elsewhere with weaker consumer protection laws.
He said he spoke to a business owner in Providence recently whose bank had pulled his line of credit, forcing the businessman to run his business off his credit card.
"They had bumped his credit card rate up to, you guessed it, 30 percent," he said.
Rhode Island repealed its 18 percent interest rate cap in 2003.
Anger at other practices of big banks has been brewing in recent weeks. Across the country, 650,000 people transferred $4.5 billion into new credit union savings accounts in the month leading up to Saturday's Bank Transfer Day, according to the Credit Union National Association.
Rob Kimmett, of the Credit Union Association of Rhode Island, said the number of new checking accounts at the state's credit unions was up about 50 percent in the last 45 days compared to the same period a year ago.
Meanwhile, Whitehouse paid his first visit to the Occupy Providence encampment at a downtown park on Monday, describing it as "clean and orderly."
He declined to weigh in on a dispute between the protesters and the city of Providence. Mayor Angel Taveras and Public Safety Commissioner Steven Pare have said they intend to take legal action to force the activists from the park, where they have been camping without a permit for more than three weeks.
In a wide-ranging interview with The Associated Press this week, Whitehouse said the Occupy movement has succeeded in shifting the political debate. He said that before Occupy Wall Street got off the ground in Manhattan in mid-September as a protest against economic inequality and so-called corporate greed, much of the "popular noise" of the political discourse was on the right. That included the tea party movement, which has quickly gained political influence.
"I see it as something pretty powerful," Whitehouse said of the Occupy movement. "I think Occupy has brought some balance back into the equation."
Barry Hinckley, the only Republican challenger to Whitehouse so far, said he thinks the anger of Occupy movement activists is justified.
"But I think they're mad at the wrong people. The government has caused most of the problems we're dealing with. The bigger the government's gotten, the more problems we have," he said.
Hinckley accused Whitehouse of favoring bigger government, citing his vote for the Trouble Asset Relief Program -- what the Republican calls a "Wall Street bailout." He suggested that Whitehouse is focusing on a populist issue like high interest rates to deflect attention from the economic downturn.
"He needs a win because the jobs crisis is so bad," Hinckley said.