Congress favors credit industry over consumers.

THE Bankruptcy Abuse Prevention and Consumer Protection Act passed by the Senate last month illustrates once again that it is easier to pass a bad bill in Washington than a good one. Make no mistake about it, this is a bad bill.

The legislation, which the House was expected to pass last week, would make it harder for debtors to file for bankruptcy under Chapter 7, and push more debtors--it targets those who earn more than a state's median income--into Chapter 13, which has tougher repayment standards. That sounds fair enough, except that the Senate wasn't interested in making banks act more responsibly by dispensing with venal lending practices, such as granting loans to people who have just filed bankruptcy and enticing college students with easy credit.

Consider this: The Senate rejected a measure to cap credit-card interest rates at 30 percent. Now, I ask, why should Washington want to protect lenders who charge desperate people as much as 36 percent in per annum interest?

The lending lobby--Big Borrow-mongers--claims that it needs protections against deadbeats who file for bankruptcy without even trying to pay off their debts. I would sympathize if the money lenders weren't so rapacious--shameless, really--about fleecing the poor.

The National Consumer Law Center argues that consumers often want to pay off their debt, but can't keep up with lenders' late fees, penalties and exorbitant interest. The center cited the tale of Ruth Owens of Ohio. By the time Owens stopped using her credit card for purchases in 1997, she had racked up a balance of $1,963. Over the next six years, she made $3,492 in payments, but not a dime went to pay off the principal.

Thanks to a 21 percent interest rate, fees of $1,518 for exceeding her credit limit and $1,160 in late fees, Owens paid the bank all that money and still owed a whopping $5,564.

As the Law Center noted, Owens would have been better off if she had become a deadbeat in 1997 instead of honestly trying to pay off her debt. The bank wound up driving her deeper in the hole.

Some in the business complain that the very folks who criticize the financial-services industry for gouging poor lenders would be kicking the industry if it did not lend to the urban poor. They have a point: Consumer advocates do push banks to loan money to the often-overlooked urban poor, so that they can buy first homes and start their own businesses.

That said, I have yet to hear any consumer advocate say banks owe it to the poor to charge predatory interest rates, as well as exorbitant late fees and over-limit penalties.

In fact, the industry's woes suggest that Washington should make it easier to file for bankruptcy, in order to protect the banks from themselves. As noted by Travis Plunkett, legislative director of the Consumer Federation of America, lenders "have it within their power to control the bankruptcy rates by controlling their practices."

As a Republican, it disappoints me to say this, but I understand why people call the GOP the party of big business. When Washington pushes for more responsibility among debtors but not loan-shark-like lenders, and when its "ownership society" principles don't make big corporations own up to their role in the bankruptcy problem, the GOP is toadying to big business.

Some House members were said to have second thoughts about the bill, but they figured there was no percentage in voting no, and displeasing a political contributing class. They probably figured, "Why anger the credit industry?" when they know they're going to lose.

Well, there is a reason to anger the credit industry--to represent your constituents. Citizens who care about good government and good business practices should at least make those lawmakers who vote for the measure sweat.

Debra J. Saunders is a columnist for the San Francisco Chronicle.