Sanders, Ocasio-Cortez Propose 15% Cap On Credit Card Rates

[Ghost Dog]

(Note: this is ZertoHedge... but well-enough written...)

America's revolution to a socialist, government-planned society complete with reserve currency helicopter money also known as "MMT", may or may not be successful but it certainly will be attempted, and every moment will be not only televised but also tweeted.

On Thursday morning, Visa and MasterCard tumbled after the democratic party's "progressive" socialist wing consisting of Bernie Sanders and Alexandria Ocasio-Cortez, announced they would introduce legislation on Thursday to cap credit card interest rates at 15%, a sharp drop from current levels. The proposal follows not long after AOC also proposed the "Green New Deal" - which among its various policy proposals urged to give a generous and recurring cash handout to any and every American, regardless if they work or not, and which according to analysts would cost the US as much as $100 trillion over the next several years. In addition to a 15% federal cap on interest rates, states could establish their own lower limits, under the legislation.

Sanders, the socialist Vermont senator running for the Democratic nomination for president, told the WaPo in an interview that a decade after taxpayers bailed out big banks, the industry is taking advantage of the public by charging exorbitant rates. “Wall Street today makes tens of billions from people at outrageous interest rates,” he said. Ocasio-Cortez, the socialist New York representative who is expected to run for the Democratic nomination for president as soon as she is eligible, will introduce the House version of the bill.

According to some, the proposal is quite timely, and comes just as credit card rates recently hit an all time high despite artificially low interest rates, according to Creditcards.com, which has been tracking the data since 2007 and compiles data from 100 popular cards. The median interest rate was 21.36% last week compared with 20.24% about a year ago and 12.62% about a decade ago, according to the website...

https://www.zerohedge.com/news/2019-05-09/bernie-sanders-ocasio-cortez-propose-15-cap-credit-card-rates-visa-mc-tumble

[Quemado]

1. How about a special tax on credit card interest revenue earned by the banks

as a way to pay for the GND?

Just a thought (brain fart )

[FBaggins]

3. Same impact as my #2 below

Millions of people on the fringe of the banking system would lose access to credit cards.

[Ghost Dog]

4. I think a one-off "Capital Net Worth (including Offshore Holdings) Tax" devoted to jumpstarting GND

would be a good start...

[FBaggins]

2. Not sure that's possible

Usary rates are a state-level decision currently.

It would also create potentially millions more "underbanked" people overnight.

[Ghost Dog]

5. A federal or state "Social Support & Stimulus Bank" exclusive to

the victims you refer to could cover that.

[FBaggins]

7. How?

The people who would fall out of the system would necessarily be the people with the lowest credit scores and highest default rates. The rate that the "stimulus bank" would have to charge to cover those losses wouldn't be much lower than what the current system charges.

[Ghost Dog]

8. It would cover losses with "intelligently administered socialist redistribution of wealth policy".

Support and stimulus bring many benefits down the line.

[FBaggins]

9. Ah! So you're proposing a government bank that knowingly loses money

Funded by the taxpayers of course... and the customer gets to decide how much stimulus he needs - by borrowing that much and then defaulting on it.

Quite the scam.

[Ghost Dog]

11. No. The customer would not decide. The State Bank would decide, intelligently.

[FBaggins]

13. Decide what intelligently?

Which customers to lend to in the first place or which bad debts to forgive?

Either way... you're back to the original problems.

[Ghost Dog]

14. Both. See above.

[FBaggins]

15. So you would appoint a blue ribbon commission?

The classic spin that claims "we'll make the right decisions" when faced with the conundrum that no such decisions are possible.

As I implied... if you "make smart decisions" on who to lend to... then you're back to millions being unable to get credit that they currently have access to (but is too expensive). If you "make smart decisions" on which debts to forgive, you encourage people to go too far into debt (either to get the forgiveness free money or the declare bankruptcy free money).

You need to accept that changing incentives always leads to changing consumer behaviors.

[Ghost Dog]

16. I am talking Authoritarian Socialism,

Using contemporary and developing future techniques involving mass surveillance, huge data and artificial intelligence to do what is necessary (rather than to sell more stuff and produce more waste).

There will indeed be a need for re-education, forced labor, national service, prisons.

[FBaggins]

17. Ah! Communism PLUS Big Brother!

I guess I've missed the sarcasm all along.

[Ghost Dog]

18. I am serious.

I want green and socio-economic and therefore political new deals all round. Anything else --> Catastrophe.

Of course, this will only work once the great majority of people see and agree.

Big Brother is here now, thriving on disinformation and double-think. The intelligent alternative I describe would have to be open and transparent to all, with all agreeing that the sails have been correctly trimmed, the helmsperson under control, charts throroughly consulted and the vessel on the best possible course considering the surrounding environment it is navigating through towards the future.

Or else: No future.

[FBaggins]

19. Then why even comment about credit card interest rates and banks?

They are essential parts of a system that uses prices to allocate goods and services across the population. If an "intelligent" centralized authority is going to determine what and how much can be consumed (as well as by whom)... then you don't need money... let alone credit cards regardless of the interest rate.

[Ghost Dog]

20. State planning and execution can coexist with a system using prices to allocate goods and services.

The Support and Stimulus Bank and redistribution policy will enable the people unable to compete in the price-system to become economically and therefore socially active. It is investing in people. The price-allocation 'market' system, though, must also be 'shaped' according to overriding plans such as GND.

Interestingly, as I read and write here as well as elsewhere, I came across, linked from a Guardian opinion piece, the following video: "Freedom Under Capitalism with Street Fight Radio":

[FBaggins]

21. "Can"... sure. But not in the case you described

A system can be fully socialist and still take advantage of the price mechanism to allocate resources.

The problem is that your words were:

Using contemporary and developing future techniques involving mass surveillance, huge data and artificial intelligence to do what is necessary (rather than to sell more stuff and produce more waste).

There will indeed be a need for re-education, forced labor, national service, prisons.

That isn't socialism of any sort. That's full-on Marxism/Communism and is incompatible with not just using the price mechanism, but incompatible with Democracy itself. This is the stuff of "Communism never failed, it's just never really been tried and didn't have enough data". You can call it "authoritarian socialism"... but that's just a label some use to avoid admitting they're talking about Communism.

[Freethinker65]

6. Nope. But keeping rates constant and low, and even lowering them, for those that pay their bills...

...for those that pay their bills consistently and those that never miss a minimum payment I would support.

Those with less than stellar credit should have the opportunity to lower their interest rate over time through consistent timely payments. There is no reason that something like disputing and struggling to pay a past due medical bill should affect your credit card interest rate for decades.

Credit companies are taking a risk by fronting the consumer money with no real collateral to back it up. It is an unsecured loan and they do get burned by fraud and non-payments. They also reap massive profits by charging excessive fees and interest to consumers that play by the rules.

FYI. I have been very lucky to have always been able to pay off my credit card by the due date. I, too, have seen the fees and interest rates rise and I hope I am never in a situation where I need to pay them.

[Ghost Dog]

10. This is reasonable.

Abusers need to be discouraged but rehabilitation encouraged.

[SWBTATTReg]

12. Any attempt to limit interest income earned by lenders (the interest rate) will lead to a ...

reduction in the amount of funds available for lending. Simple law of supply and demand. This won't help those who really rely on these types of 'predatory' loans, if anything, it would make funds LESS available.

What is needed is a higher minimum wage and/or other mechanisms besides SS, e.g., a special program to kick in should one's income fall below a certain target, so these folks won't go hungry, homeless, etc.

A blanket attempt to increase SS payouts I think wouldn't be fair for those who have paid into the SS system for literally decades, unless they too, rec'd increases.

I know of so many people who underreported their incomes to avoid paying taxes (SS, federal, state, etc.), and then when SS rolled around when they were eligible, their SS payments sucked. What did these people expect? Don't want to pay their fair share of taxes like the rest of us, and then later, when it really counts, their SS payouts are significantly less.