Here’s what we know…

1. Significant changes in credit card regulations designed to better protect consumer interests became law with the passage of the CARD Act and will be implemented in February 2009.

2.  These changes were motivated both by concerns over aggressive rate hikes, term changes and other questionable behavior on the part of lenders.

3.  Small businesses are exposed to the same kinds of behavior with respect to their credit cards.

4.  A large number of analysts and a relatively high percentage of elected officials in Washington are concerned about small business success and have warned against the negative overall economic consequences of small businesses being mistreated and/or cut off by credit card companies.

Based on that, it would seem reasonable to assume that the CARD Act is only the first move in a regulatory two-step.   CARD takes care of the consumers and some other measure (or an expanded CARD) intervenes on behalf of small businesses, right?

Wrong.

Consumer credit card protection is on the books now, but small business protection just ain’t happening–even though the arguments in favor of it would seem, at first glance, to be stronger than those in favor of shielding consumers.  After all, everyone is understandably focused on that 10%+ unemployment number and we’ve heard about how small businesses are our best hope to whittle that number down and to progress with an overall recovery.

But it isn’ t happening.

It’s not for want of trying.  Earlier this year, a Senate provision that would’ve amended the Truth in Lending Act to afford small businesses protections against business-busting credit card lending behavior couldn’t get off the ground.  It disappeared and it did so relatively quietly.

Recently, Hawaiian Representative Neil Abercrombie (who has a beard that would make John Corzine’s hide in shame) tried to make something along those same lines.  The effort fizzled.

So, why is Uncle Sam gung-ho about protecting your personal Visa that you use to buy Christmas presents and occasional consumer purchases while turning a blind eye to businesses who use cards as a cash flow management tool that can be integral to their continued operation?

It’s hard to tell.  These measures aren’t getting front page attention and there isn’t a lot of populist yelling and screaming going on about them to drum up interest.  They’ve just quietly died before ever seeing a vote.

When the Senate measure got the pre-vote beatdown, the official line from those who talked about it discussed the distinctions between business and personal credit and how application of similar rules on both sides of that divide could have serious consequences that might even lead to a greater restriction of credit.

While there’s probably a kernel of truth to that, it seems as though some baseline level of protection against the more craven acts of lenders could be safely implemented.  The political explanation for the failure sounds a bit more compelling.

According to the New York Times:

“And lobbyists and staffers on both sides acknowledge that a vote on the amendment would have put some Republicans in a bind, pitting their general distaste for regulation against a powerful and loyal constituency.”

In other words, the Republicans weren’t interested in biting down too hard on the banks that feed them.

Before you get yourselves in a partisan uproar, the Democrats may have been playing the game, too.  The same article notes:

“…but others and a lobbyist close to the process say they believe Democrats were more leery of upsetting the delicate compromise they’d reached with Republicans on the broader credit card legislation.”

That’s right, the people who control the House, Senate and Presidency were apparently a little worried about stepping out on their own for the sake of small business protection.

Recent experiences with the Abercrombie effort in the House show us even more of the nasty political sausage-making process than we’d probably like to see.

A recent Robb Mandelbaumm column maintains that Abercrombie went to resident reform bigshot Barney Frank, looking for a little support.  Frank begged off after finding out that Nydia Velázquez, a New York Democrat on the Small Business Committee, wasn’t too enthused about offering protections to small businesses.

Her reasoning?  she thinks it would blur the lines with respect to personal and consumer credit and the Truth in Lending Act.  Another likely part of the story, she didn’t like the idea of anyone other than her committee getting the job done:

“Mr. Adamske, the aide to Mr. Frank, ventured that “jurisdictional issues” may also have played a part in Ms. Velázquez’s objection — meaning that she believed her committee should have a bigger role in shaping the legislation.”

I do not know enough about the likely impact on overall lending to small businesses that might stem from Abercrombie’s proposal or other efforts in the same vein to offer an opinion as to the desirability of a “Small Business CARD Act.”

I do know enough to believe that the lack of protection probably has a lot less to do with those impacts than it does on who’s funding whose campaigns and other little beltway issues that undoubtedly seem laughable to the small business owners who are on the receiving end of repeated credit card company smackdowns, though.