The banking industry is so, so predictable. Whenever talk turns toward capping predatory interest rates on credit cards or other financial products, like clockwork, the group warns that consumers will have to kiss their access to credit goodbye.  Last Tuesday, in a new hour-long documentary titled The Card Game, PBS' Frontline explored the increasingly abusive credit card industry. And the industry's response to questions about reining in interest rates was exactly what we would suspect.  Watch the final portion of the piece, in which the issue comes up and Scott Talbot of the Financial Services Roundtable argues that caps would "destroy our free market economy, which is the heart of capitalism":

In a separate web-only video, reporter Lowell Bergman asked numerous lawmakers and banking representatives: "Why not cap interest rates?" American Bankers Assocation Vice President Nessa Feddis responded by claiming, "History has shown that government controls, interest rate caps, don't work. It means that a lot of people who need to have loans don't get them. ... And at the end of the day, customers pay more." 

Of course, Feddis' claim about what "history has shown" is just plain incorrect. For most of the last century, usury caps were actually commonplace in America. Then in 1978 the Supreme Court ruled that lenders could set interest rates based on where they themselves -- rather than the consumers -- were located (Marquette v. First of Omaha Service Corp.).  As a result, the nation's largest credit card companies set up shop in those states with the weakest consumer protections and begin hiking rates. Shortly thereafter, the prime rate peaked at 21.5 percent in 1980. While rates have fallen to historic lows since, credit card companies have kept rates sky-high, particularly for low and middle-income borrowers.

Luckily, some members of Congress have long memories. This week, Democratic Reps. Louise Slaughter (NY), John Tierney (MA.) and Michael Capuano (MA) plan to introduce the Restoring America’s Commitment to Consumers Act, which would cap annual interest rates on credit cards at 16 percent.  The bill would also limit certain annual fees and cap late payments at $15. And like the Consumer Financial Protection Act, it would raise federal benchmarks that could in turn be strengthened by states. More from a joint statement:

“For years, but particularly during these challenging economic times, Americans of all ages – from college students to senior citizens – have been forced to take on credit card debt to pay their bills and make ends meet. What we recently have seen in response is that the credit card industry has seized this opportunity to unfairly and arbitrarily raise interest rates across more customer accounts than ever before. This legislation would end such exploitive practices and protect consumers,” said Tierney.

"For too long average Americans have been asked to shoulder debt under conditions they can do little to control," said Capuano. "This bill will protect consumers by ensuring access to affordable credit, and it couldn't come at a more critical time."

Back in March, Chicago labor lawyer Tom Geoghegan explained in a Harper's article the inextricable link between interest rate deregulation and the demise of a strong labor force in America.  Even centrist Democrats like Illinois' own Rep. Melissa Bean are getting on board with the need to reform the financial services sector, noting just yesterday that the package of financial protections sailing through Congress aren't about "more regulation" but "better regulation."

That's a case that the Senate's chief anti-usury advocate, Sen. Dick Durbin, has been making for some time now. As regular readers may recall, last year he introduced a bill to cap annual interest rates for all consumer credit products at 36 percent while agreeing to co-sponsor Sen. Bernie Sanders' (D-VT) proposal to cap credit card interest rates at 15 percent (which was ultimately defeated by a handy margin).

But even industry insiders predict that the results could be different this time around because of the outrageous rate hikes recently imposed by the credit card companies in anticipation of tighter federal regulations. Indeed, a recent poll indicated that half of all Americans have seen their credit card interest rate rise in the past six months. Their complaints will hopefully motivate lawmakers.

In the meantime, go check out the entire Frontline piece here.