Criticism
Critics and defenders of the credit-card industry have agreed that Marquette Bank opened the door for vast changes in how it does business. The former have often criticized the Court's ruling in the process.
"e effectively engaged in the single biggest policy change in the credit area, the whole consumer credit area, through an obscure Supreme Court decision interpreting some ambiguous language," Massachusetts senator and former Harvard Law professor Elizabeth Warren, a frequent critic of the consumer-credit industry. "In terms of changing our lives", says Chicago labor lawyer Thomas Geoghegan, "it may be the biggest case of our lifetimes."
"The effect was to gut every state law on usury", he says. The 1863 Congress, Geoghegan complains, couldn't have imagined credit cards when it passed the National Banking Act. He conceded that Brennan's opinion is technically right, but speculates that the justice thought Congress would step into the gap afterwards and enact a national credit-card rate cap, although that was politically unlikely at the time. In 1991 New York Senator Al D'Amato, a harsh critic of the credit-card industry, introduced a bill that would have capped credit card interest rates at 14% in response to a suggestion by President George H.W. Bush. His colleagues passed it overwhelmingly after half an hour of debate; the stock market fell as a result. It was never voted on in the House, and soon Congress focused on studying the industry's lending practices rather than capping interest rates.
Defenders of Marquette Bank point to increased competition in the credit card market as a positive result. "Contrary to the conventional wisdom, Marquette did not lay a foundation for runaway bank profits and consumer suffering," says George Mason University School of Law professor Todd Zywicki. "Rather, by eliminating archaic and largely ineffective usury restrictions, Marquette increased efficiency and competition in the credit card industry, made the market more responsive to consumer demand, and provided large benefits to consumers." Specifically, he cites the shift from retailer-issued credit to third-party bank credit as the biggest component of this change made possible.
On May 22, 2009, the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit CARD Act) was signed into law.
Read more about this topic: Marquette Nat. Bank Of Minneapolis V. First Of Omaha Service Corp.
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