That's it? Obama wants clear CC bills and no "sudden" rate increases?

[cwcwmack]

You must be fucking kidding me... CC companies are killing peopel with these damn 29.9% APR's and confiscatory fees... and Obama wants clearer bills? And a slower rise of rates? How about the people who ALREADY burdened by these banks?

How about retroactive interest rate ceilings?

Thanks for nothing...

[onetwo]

1. "Retroactive rate ceilings?"

A bank (or any business for that matter) should be able to price its product any way they like as long as they abide by the following:

1) The price is clear to the customer.
2) No violations of anti-trust laws.
3) No price collusion.

A market regulated to ensure the above will eventually yield the fair price to buyer and seller every time.

[Name removed]

3. Deleted message

Message removed by moderator. Click here to review the message board rules.

[cwcwmack]

5. how sweet...

and how would Rand oppose the Bank villains? Rand was uber laissez faire!

[onetwo]

6. Credit cards are a luxury.

Unlike things like gasoline and electricity, it is non-essential. Call it "libertarian garbage" if you must, but it's not the government's job to ensure that luxuries are affordable.

[jbnow]

24. For many they were not a luxury, you musy know that

Medical/dental bills, automotive repair, a needed roof or a furnace, living needs during a period of unemployment

I don't care if people bought new furniture and took a vacation actually. We can say that was dumb or that lower wage uninsured workers should have saved ahead of time for a hospital bill but the people are being screwed over and even brought to ruin by a sudden change in terms. The ones they mostly went after are people who have a large balance they have held for some length of time. Even if people have made all of their payments on time all of a sudden their rates shot up (sometimes from a very low "life of the loan" rate like 3%) into the 20's% AND they increased the monthly % of total bill that must be paid. (Until Cumo hassled them Chase was also adding a $10 month processing fee!) Oh some were also lowering limits but letters came week after they were lowered. In the meantime if the person made a charge that put them over the limit they didn't know they had they got huge penalties for that.

So people who were handling their bills fine suddenly have a huge minimum payment that they can't possibly meet. With the rise in interest and percent of total some people went from something like $200 month to $900 a month. That makes essentials like gasoline and electricity and food and medicine impossible if they don't want to default on the debt.

Some people had been late...they got letters saying things like "In August 2003 you made a late payment so we are raising...". Some had never been late. I'm sure if they read the fine print they'd have known the companies could commit this usury without being jailed...it's all legal.

They say they have to raise rates because of risky people...but they are doing it to people that were paying and forcing them into defaulting really. They didn't raise everyone's, didn't raise mine, they raised it on those it would hurt the most.

They'd have made the money on these people. Paying slowly means the companies make more money on it...so they put them in a situation where they can't pay.

I figure they gave the credit default swaps on these debts bundled into securities...so they ruin the person and when they default get the money. I bet the hedge funds they own have multiple CDS on the same securities so they can get paid off many times over for the bad debt...

In the meantime if that person is late or over limit or defaults on the card any other card they own will respond by spiking their rates too, in some states insurance companies hike rates when a persons credit ratings fall.

Libertarian is cool but I think government should step in when these damn financial companies we are funding start pulling this crap that will further strain the economy for all of us.

[SanchoPanza]

50. According to what barometer?

Depending on where they live, a person can lead a perfectly comfortable life without gasoline or electricity. It may not be comfortable through the lens of American suburbia, but not everyone lives there. Of course, it's in the national interest of the United States to make sure that as many citizens as possible have access to affordable electricity and gas.

The same is true of credit cards. On an individual level they may not be essential. But they do provide a great deal of liquidity for our economy. Making sure companies that offer such a service are not endangering the overall health of an economy by punishing large swathes of the population with usurious rates is indeed in the national interest.

[LostinVA]

73. Yes, to pay for medical expenses, food, utility bills, clothing for your children

Especially for people who have been laid off or have reduced hours.

They are NOT a "luxury" to many in this economy, and haven't been for a long time for people without health insurance. How do you think the working bill pay for their children to go to the doctor and dentist???

Ignorance of blue and white collar edge existing.

[Raineyb]

81. Credit cards USED TO BE a luxury

"Cheap" and easily obtained credit has been used to make up for stagnant wages for nearly 30 years now.

And the credit card companies go out of their way to get as many people as possible in the position where they are not ever going to pay off their balances. This is why the minimum payments don't even cover the interest that will accrue on the account from month to month. They raise their fees every chance they get, they jack up interest rates because of things that occur between you and some other creditor. The credit card companies are not the victims of a bunch of deadbeats. Yes there are plenty of deadbeats but considering that credit card companies send billions of offers to people regardless of their employment status or their ability to pay I wouldn't spend too much time crying in my beer about the wrongs done to the credit card companies.

The fact that the credit card companies call people who pay them off in full without allowing any interest to accrue deadbeats tells you all you need to know about the mentality of the credit card companies.

Regards

[roguevalley]

87. jeez, I will remember to tell that to a friend who uses it to pay for

chemo. Nice.

edit: this is for farther up list.

[krawhitham]

108. Umm, people are using CC for things like

gasoline and electricity because they have no other option

[ecstatic]

142. Yes...but

at the end of the day, a credit card offers money that is not yours. Doesn't matter what you're using it for--it's still someone else's money. Harsh, but true.

[digidigido]

137. You could also define it as usury rather then luxury, and I think that would be more accurate

[cwcwmack]

4. spoken like a true capitalist... n/t

[onetwo]

7. Properly regulated capitalism is a beautiful thing.

It's the world's most effective win-win system.

In an ideal world, there would be only three ways to get rich: 1) Helping a lot of people in small ways, 2) helping a few people in big ways, and 3) helping a lot of people in big ways. Too bad we live in reality with its imperfect set of laws that allows for a fourth way: Rip people off.

[leftstreet]

34. LOL "properly regulated capitalism"

Yeah, it's just sooooo beautiful

[onetwo]

44. LOL!

Good one :)

[mkultra]

67. and what, pray tell, do you suggest? redistribution?

because that's worked zero times so far.

[rpannier]

98. How about some serious government intervention/regulation

like Theodore Roosevelt and Franklin D Roosevelt did

[avaistheone1]

110. our predatory capitalist system isn't working very well either

judging by the trillion dollar bailouts, tent cities and massive unemployment.

[roguevalley]

89. I'm old and I've never seen properly regulated capitalism.

[onetwo]

125. Like America itself, it is still a work-in-progress. The fact of the matter is that

we have come the closest to the ideal and that's why we are the world's leading economic superpower. We are ****ed if China finally catches on.

[Renew Deal]

16. Do you think credit cards should be set at 0%?

Do you have a credit card?

[avaistheone1]

111. Banks are getting taxpayer money for 0%. How dare they charge

18% 20% 30% 35% !!!!

That is highway robbery.

[raebrek]

129. Banks are not getting the bailout money for free. n/t

[Raineyb]

130. They're getting it for significantly cheaper than the

18-30% they're charging on their credit cards.

And frankly, the interest rate is so low it's practically free. They'd make profit on a 4% interest loan.

Regards

[raebrek]

138. Yes

But banks can borrow money from other banks for less then they can borrow it from the goverment. So it is expensive money for them imo.

Raebrek!!!

[gmoney]

29. horzeshit...

They prey upon human weakness and misfortune for the most part. Predatory lending is real. There's NO reason we shouldn't cap rates at prime+5% or so.

I used to work for and with banks... easy credit and "free checking" are traps, plain and simple.

[onetwo]

32. For the most part, prime banks become sharks when promises are broken...

Promises like, "I will never make a late payment," and "I will never exceed my credit limit/maintain a negative checking balance," and "I will never default."

Lawmakers should definitely step in and lay the ground rules for how penalties will work going forward. For instance, there should be a federal guideline backed by law governing how rate increases are to be handled and in what situations they can be assessed. However, the banks should be able to start off offering to the consumer whatever price they like -- the customer will find the right deal for him/her and banks that find themselves priced out of the market will adjust accordingly.

PS: I have put my feet in these so-called "traps" many times and have always gotten the deal advertised (example: I have borrowed $20,000 completely unsecured and repaid during the course of the 12 month promotional term, paying absolutely NOTHING in fees or interest). The key? Keep your promises.

[gmoney]

33. Well, evidently you've had a reliable income stream your whole life.

The vast majority of Americans who live paycheck to paycheck are the targets of the traps... banking turns most people's finances into a house of cards.

It takes a few days for your paycheck funds to be available, but somehow the check you send the power company gets cashed and deducted the day you mail it, so you get an overdraft fee, where they MAIL you a notice (eventually), but before you get that notice, the power company's bank presents the check a second or even a third time, dinging you with a $40 fee each time. This causes your check to the grocery store to bounce, and the same thing happens again, and you end up owing the bank $200+ in fees for doing nothing, plus you still owe the power company and the grocery... when they finally decide to clear your paycheck, THEY take their "fees" off the top. The power company and the grocery are pissed, and they may charge you fees as well.

Yes, ideally we should all be living cash-based lifestyles, but the reality is that people don't. Or sometimes they can't. Banks are all too eager to offer a "helping hand" then turn around and stab you in the back. Banks were pushers of the idea of "easy credit" and 90% to 125% loan-to-value norm that pumped up the housing bubble and got people in WAY over their heads. It wasn't about poor people trying to cheat the system. It was about banks trying to get people to leverage every dime they had, and a whole lot more that they didn't.

[onetwo]

52. You're concerned with the penalties.

I fully agree with you that rules need to be set that protect the consumer against ridiculous (but all too common) situations like the one you described. Check my last post.

My only point is that the banks should be free to set the initial standard non-default/non-penalty terms to whatever they like. If the customer doesn't like it, he/she walks. If enough walk, the bank will move the rate to where it needs to be.

[roguevalley]

90. banks can fuck themselves. they are usurious and people are

suffering.

[quakerboy]

55. That assumes you have the potential to do so

Some people do not have that potential. There are the clear examples, for instance my cousin, who at 21 has 2 credit cards maxed out. She is developmentally disabled, and is still taking classes to try to learn basic life skills. She will likely never have a job, given all her disabilities. But someone, 2 someones decided she was eligible for credit. She is incapable of dealing with those responsibilities. Pretty clearcut, but in our current system, there are no safeguards to protect her.

Then there are your average people, who never learned how to deal responsibly with financial situations. I have been volunteering time helping people learn basic budgeting skills for a while now. A large number of normally intelligent people just seem to shut down when faced with abstract numbers. People who could take a handful of bills and make it work, when handed a card, lose all ability to regulate. And cards are worked in such a way as to make it as easy as possible to make a mistake.

There is no reason that a card should even be able to go over the balance/limit. Or that, given an offer to have a cash advance at 0% for 6 months, going to a higher rate after, I should not be able to take that money, and apply payments to that balance. Yet if I do that, and then go to pay it back, if I have a normal balance, that is paid off first, and I do not get to chose how to apply the money. There is no reason that credit offers should be sent to every person in the country. If you want to defend credit as a "privilege" then it should be presented as such, rather than as an omnipresent and even intrusive fact of life.

In the end, good for you, but have some compassion for everyone who is obviously not as gloriously able as yourself. Sure, some are plain greedy. But a great many just do not have the skills or any training in critical thinking to get them to those skills.

[rpannier]

47. Yet here we are with c/c companies changing their rates and rules

We have laws against 'loan sharking' and 'usury fees' yet credit card companies have crossed well over that line to the point where they are getting away with 25-30% on people who ARE paying their bills on time, they lower the amount of credit available because they feel like it, thus damaging people's credit ratings, etc.

The president ought to issue an executive order that caps fees at 15%, using the war against terror as his justification for doing so.
In trying times, when the security of the nation is at risk everyone has to tighten their belts -- that includes these banks and lending institutions.

[izzybeans]

86. yeah but the tooth fairy set the price with magic fairy dust

so all is forgiven. Don't you see?

[rpannier]

95. Damned toothfairy

I've always hated that thing,

Nothing more than a misery merchant

[Romulox]

62. Banks shouldn't rely on the US taxpayer to guarantee their bad bets.

So take your "should" and shove it, k? :hi:

[LostinVA]

72. Not true -- price gouging is against the law, and usury used to be

[onetwo]

124. Legally, the government can step in to fight price gouging only during emergencies (eg Katrina)

At all other times, practically all businesses are free to charge whatever they like as long as they abide by all of the laws that ensure fair competition.

[avaistheone1]

114. You just broke my bull shit detector.

You are so full of it.

Now apologize.

[onetwo]

126. Exactly how did I break it?

Serious question.

[cwcwmack]

2. ok

let's start with 12.99% ceilings...

and mandatory communication attempt before a derogatory item is reported to the Credit Agencies...

and a total payment ceiling... a $999 LCD TV should NEVER cost $4000 to pay off even IF it takes 5 years...

[asphalt.jungle]

8. one shouldn't have a $999 LCD TV if you can't pay for it cash

if you need to finance an LCD purchase that's a sign that you need to downgrade to a CRT.

[Leftist Agitator]

48. Where do you buy a new CRT TV?

:shrug:

[asphalt.jungle]

53. i see them in bjs all the time.

lcd tvs don't even cost $999 anyway unless you want a huge one. if it's going to be such a problem where it's going to take years to pay off a tv i don't think that person should be too picky. there are lots of new tvs under 300 bucks available. you can even find a new 32" panasonic lcd hdtv for about $550.

[mkultra]

69. How needs a fricken tv anyway

The only people who need credit cards are serial spenders. the cycle shouldn't be eat-sleep-buy.

[roguevalley]

91. some people didn't have credit card problems until the FUCKING

SYSTEM FUCKED THEM and they lost their jobs, etc. I know plenty but since they can't find work they buy food for their kids on credit. They have nothing else. But don't let that slow you down.

[mkultra]

97. well, far be it for me to come down on the less fortunate

And i know people do dumb things, but they really should have went a different road. Revolving credit really isn't the solution in that situation. filing bankruptcy and going after charity and food stamps is the answer.

The problem many people make when faced with economic change is the refusal to begin down scaling their life for a smaller income. I know some dipshits near me that both worked 50K jobs. Both of them drove these $45K excursions and one of them lost their job just before the gas prices spiked.

Instead of scaling down, they went into 30K of credit debt. I feel for them, but not completely.

[quakerboy]

56. so then credit cards just shouldnt exist

If you can't afford it cash, you don't get it. And if you can, you can just buy it cash(or debit). So credit cards become irrelevant.

[asphalt.jungle]

64. So you don't see whining about credit card terms when you CHOOSE to buy luxury items --

and yes a 45" LCD HDTV is a luxury item -- with that same credit card as a little hypocritical? I find that kind of passing the buck irresponsibility disappointing. If I financed a luxury purchase like that it would mean I'm able to pay it off in two months tops. In fact, if it's going to be longer then it would have to be one of those deals where it's interest free on a store card for 6 months or something. I use credit cards as a substitute for my debit card for online purchases, restaurants, etc. because fraud is much easier to deal with on a credit card and I don't walk around with much cash. But I don't use it to buy things I can't afford or don't intend on paying off in full when the bill comes.

There are always cheaper options than a 45" LCD HDTV. And if it's going to take you years to pay that off then the responsible thing to do is buy something much cheaper. That's not an item anyone is entitled too. So if you want to be a sucker for a credit card company and believe that you are ENTITLED to such items then don't cry when it's time to pay the piper.

[quakerboy]

77. I find the assumption that that is what credit cards have been used for

to be flawed. Many times credit cards have been used to keep up with buying groceries. Or gas. Or to pay a medical or other unavoidable bill.

Dont you see the credit card companies send out offers and cards like they are candy to be hypocritical? If everyone used Credit cards the way you describe, credit cards would not make the massive money they have become accustomed to. But instead of handing cards to people who would use them that way, the companies are handing them out like so many coupons for a dollar off the taco dinner opening night.

There are ways to reasonably determine who is likely to handle credit responsibilities well, but the Credit card companies CHOOSE to send cards to people who are grossly unqualified to have access to the risks of credit. If a card company wants to be a sucker and feels ENTITLED to give credit to such persons, then they shouldn't cry when the debt comes in overdue.

[asphalt.jungle]

79. other scenarios weren't discussed in the post i originally responded to

my first appearance in this thread is the "one shouldn't ..." post. read the "ok" post that i replied to.

[Freddie Stubbs]

68. Who are you to tell peope what kind of TV they should or should not have?

:shrug:

[mkultra]

70. anyone who must listen to credit card debtors bitch, thats who.

If your complaining out revolving credit debt, then i would prefer to tell you to stfu, otherwise, just stop buying expensive unnecessary consumer goods.

[asphalt.jungle]

76. if they are going to bitch about how unfair it is that it takes them years to pay it off

then i'll repeatedly tell them to reevaluate their life and how they spend money wastefully, especially when it's not theirs. someone should have told them that a long time ago. my parents gave me that lesson when i went off to college.

no one tells me what i can and can't buy, i tell myself that based on how much i can afford. if it's taking you years to pay off a tv then sorry you should have never purchased it in the first place. and may the credit card companies have mercy on you.

[Trajan]

102. Irrelevant ...

The poster said that NO loan for $999 should cost $4000 ...

Whether or not someone buys a new TV or a used TV has no bearing on that assertion ...

The current credit environment is usurious and unfair ...

I say: return to the rules as they existed in the 70's, before the Reaganites changed the rules ...

[onetwo]

10. The problem with arbitrary ceilings is that they are arbitrary. Low ceilings can hurt many of us...

Either one of two things will happen (and possibly both, knowing the banking industry):

1) Those who currently enjoy low rates will become much more susceptible to rate increases to replace the lost income from the higher risk part of the portfolio.

2) Credit will become much harder to attain for those with less than perfect credit (a good thing?).

Completely unsecured revolving credit is as much a luxury as any high-end product or service out there. Unless your credit history is spotless, it is not unreasonable to expect it to be expensive. Obama's approach is correct -- the focus should be on a) making sure the customer knows what he/she is getting into and b) enacting rules that bring much more fairness to CC loan terms.

[MercutioATC]

12. And a pony! I WANT A PONY!

12.99% ceilings are a silly idea. Consumer credit rates are based on a percentage over a benchmark...and that benchmark fluctuates. Some people's creditworthieness is such that the risk they represent warrants a rate much higher than 12.99%. Regardless, anything below legislated usury rates should be permitted.

Your responsibilities are clearly defined by contract. Pay on time. Pay at least the minimum payment amount. Don't exceed your credit limit. Fail to do any of these things and that breach of contract is reported to the credit rating agencies. No need for advance notification.

Your "total payment ceiling" is my favorite, though. You're advocating a maximum total payment on an open-ended line of credit. Think about that for a moment...see the problem?


I absolutely agree that some basic reforms would be a great idea.

...not these "reforms", though.

[Raineyb]

14. We used to have ceilings they were covered by usury laws.

A federal usury law would certainly be an acceptable inclusion in any credit card reform. 15% should do that's what the numbers Credit unions have to go by.

Regards

[MercutioATC]

18. It's set by state law, but there ARE usury laws...

...and credit card companies abide by them.

Are you suggesting that there's federal regulation that limits credit unions to charging no more than 15% interest? Got a link for that, because it's just not true...

[w4rma]

40. There need to be federal usury laws that apply to banks, not just credit unions. (nt)

[mkultra]

71. .

[Raineyb]

65. You're wrong. State usury laws don't mean anything to the credit card companies

In fact the credit card companies are considered national banks and are allowed to charge you the rate allowed by the state that they're based in. That's why they're all based in South Dakota and Delaware where there are no usury laws. This was established in a Supreme Court case in Marquette vs. First Omaha Service Corp in 1978. Because the banks can charge you based on their home state it has made state usury laws completely useless as far as credit cards go. Which is why we need a federal usury law as I'd suggested.

I would suggest checking out the Frontline episode The Secret History of the Credit Card for more.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

We need a federal usury law or the credit card companies will continue their rapacious business practices.

Regards

[cwcwmack]

66. wow

post of the day.

[Trajan]

103. Thanks for that smack down

I always find it unnerving to see DUers jump on the side of the very system that is running down and stomping regular working families ...

We have a few heartless bastards in DU .... They will never go away ....

[Raineyb]

117. It is more than a bit disconcerting

As you'd think people who claim to be progressives wouldn't be so quick to want to argue the credit card company's position. They have lobbyists to do that for them why are they doing it for free?

Regards

[w4rma]

39. I agree with this. The usury laws that credit unions have to abide by, banks should have to also.

Banking needs to be made boring again, not the vehicle for con-artistry that it currently is.

[vaberella]

20. I want mine to be named "Tucker" I asked President Obama for it already. n/t

[jbnow]

27. Then the raised rates should not be on people who

follow those rules
"Pay on time. Pay at least the minimum payment amount. Don't exceed your credit limit."

They are. They are following the rules and the company spikes the interest rate and % of total due each month to a point where a good customer can no longer pay.
Oh...and some who go over their credit limit are doing it because the limit was lowered 3 weeks before they got a letter informing them.

If we had a 12,000 debt on a fixed for life of loan rate of 4% and never missed a payment and it jumped to 28% you might be less cool.

My rates are fine...this isn't personal but it feels like it. When I started hearing about the problem I researched it and it is simply outrageous and bad for the economy as a whole.

[LostinVA]

75. As per Skinner, "I want a pony" is now against DU rules

Just an FYI.

[Silent3]

83. It's a good thing that all I want is a tiny horsie!

And I want it NOW!!! :)

PS: This is really a rule change?

[LostinVA]

85. Yes -- he said it in his big GD thread

I didn't want you to be in trouble if you didn't know.

[lumberjack_jeff]

132. That is not the understanding I got from the thread. n/t

[roguevalley]

92. if people are such a risk cut them off and let them pay the balance

off at a rate that isn't slavery. don't make the rest of us who do our part get slapped in the ass over it. this is debt slavery. People would pay off their cards if it was possible in their lifetimes. Too damned bad banks are no better at staying solvent than some of the people castigated in this thread. We are not responsible to be enslaved so they can get out of their own damned holes.

[high density]

13. Total payment ceiling = higher minimum payments

I thought people were already bitching about minimum payments creeping up?

Don't buy a $1,000 TV if you need four years to pay it off.

[alcibiades_mystery]

9. The next outrage, coming right up...

Yeesh.

[FrenchieCat]

11. What took it so long?

Fuck, the President can't do nothing right!

"T" Party, here they come!
T = torture

[vaberella]

19. I was just about to say. ~sigh~ n/t

[jberryhill]

41. Yup...

This one is something of an Energizer Bunny.

[cwcwmack]

15. 15 BILLION DOLLARS

annually in late fees and over limit fees.

jerks.

[Renew Deal]

17. Why are you so angry at people that pay late?

What do you care?

[onetwo]

23. True, irresponsible borrowers shouldn't get sympathy. However...

...a flat $39 late charge in many cases is usurious and completely inappropriate for smaller balances. The most fair way to assess such a charge is to make it a percentage of the minimum payment with a legislated ceiling.

Penalty fees shouldn't be considered profit centers, which justifies a law-enforced hard cap.

[cwcwmack]

25. I think it's wrong.

I'm currently free of debt except for my mortgage... but I went through the whole DEBT CLOUD that so many go through... and it's tough.

And the banks don't make it easier.

Just an example...

An employee of mine is 19 years old... he told me a story about how he was charged $175 for 5x overdraft fees in one day. Funny thing though... it was for stuff like McDonalds $6.54, Blockbuster $3.23, Gasoline $20, A gallon of milk $3.25 and a pack of gum...

[mvd]

26. Right on

I edited in my other post explaining why Congress SHOULD control credit cards and help reduce the debt so many go through.

[joeglow3]

28. Yes and no

I don't care how small the charge is. I want to know what it costs the bank to deal with an overdraft. Does someone have look at it? Is their paperwork involved with it? If yes, their fee should be the cost of doing this.

Now, if it is something that is simply handled by a computer and adds no additional costs to the bank, it should be the lesser of a % or something like $10.

[Autumn]

21. I had to fight two late charges,

it took me three days and two faxes to get rid of my late fees when the checks had cleared the day before the due date. Yeah the fucking credit card companies are jerks.

[mvd]

22. It's a good start. Hopefully not all Obama pushes for

- false advertising also should be banned - they promise low rates, no fees, and rewards, and then raise rates and fees
- yes, I agree with interest rate ceilings

Maybe they will be added later. And yes, Congress would be well within its means. Congress controls the purse strings, after all.

[onetwo]

31. Imagine if there were a ceiling on auto insurance premiums.

Here in NYC, I pay about $600 for insurance. I personally have a 23y/o friend that pays in excess of $5000 to cover a single car.

Now let's say a bill is passed and no insurer can charge more than $2000. What happens next is very predictable. Either:

a) we continue to enjoy our low rates while my $5000+/year friend gets dropped the second he coughs, or

b) my friend gets to stay on with a $3000 discount, but our rates double (or worse).

There are better ways to help the consumer (ALL consumers) than to slap a ceiling on prices and hope for the best. Make it easy for the customer to shop around, make apples-to-apples comparisons, etc. -- these kinds of measures work far more effectively than a ham-fisted cap on profits.

[mvd]

37. I don't agree at all

They should be subject to ceilings if they abuse the customer and make obscene profits, which they have.

[onetwo]

51. If you already have credit and your rates are sky-high, a ceiling sounds like a splendid idea.

However, for everyone else, a ceiling means almost certain adverse action for a lot of people. A ceiling instantly renders a large chunk of the population unprofitable -- that means lots of cancellation notices and declinations. A ceiling means that an issuer will have to subsidize the cost of retaining "borderline" clients by raising the rates of people enjoying good rates that they legitimately earned.

Here's how it should go. People with imperfect histories should take responsibility and refuse cards at application time when they are offered bad rates. The law should then dictate how rates can change should the customer accept the initial terms. Ceilings should be placed on PENALTIES (including the default rate) and not standard APR. Banks should be free to offer whatever standard initial APR they feel is appropriate and leave it to the consumer to shop the competition and find out whether the deal is good or not.

Fair?

[mvd]

54. Hmmm.. sometimes the banks will make you think there's a good deal when there isn't

If there's some kind of easy way to compare (like a database,) and initial APRs are not sky high to avoid later ceilings, maybe something can be done like that.

But I'm afraid we just have different philosophy on these things.

[The Wielding Truth]

61. Not too long ago 25% interest would be loan sharking.

[Hippo_Tron]

118. While your economic logic makes sense, it's a question of the size of each effect

Just because banks charge the worst credit risks 30% interest rates, doesn't mean that they wouldn't find it profitable to still extend them credit and only charge 20% interest rates. And while rates for people with good credit would go up, they may only go up a very small amount. The problem is that economic theory tells us what effects should happen but it's not so great at predicting the size of these effects. For that you actually need data and more serious statistical analysis.

Your logic is certainly reason to be wary of interest rate ceilings but not a reason to reject the idea entirely.

[onetwo]

135. You're right. HOWEVER. (2 points)

1) Non-partisan general economic theory rejects the concept of arbitrary price ceilings as inefficient and supply-stifling. Either supply goes down or everyone under the ceiling pays more to support the discount. You are correct in that we need to find out the extent of these effects before dismissing the idea outright.

2) Banks already have internal "ceilings" -- that is why not everyone gets approved. Anecdotal evidence suggests that the prime banks tend to not charge more than 30% APR even in default situations.

Personally, I have found the banks all too happy to extend credit at very reasonable prices as long as your credit history is fine. That means no delinquencies of any kind. And, of course, you pay no fees at all if your balance is paid in full before the monthly statements are issued. The problem lies with the penalties. I support a cap on penalties because those kinds of fees shouldn't be used as a vehicle to fatten profit margins.

[Hippo_Tron]

136. When limited to the simple supply and demand model price floors and ceilings are inefficient

But if you factor in social benefit, it's a different story. For example, minimum wages are a price floor and they are inefficient when you just consider supply and demand. However they have an enormous social benefit and statistically there is very little job loss correlated to the minimum wage increases when they actually occur, despite economic predictions of job loss if the minimum wage goes up.

Also, you have to consider that the efficiencies of a free market that sets optimal prices and quantities only work as they should when the market is perfectly competitive. The banking industry is far more of an oligopoly than a perfectly competitive market. Most of the market share is controlled by a few huge banks. They informally collude to set those 30% interest rates because it's in their best interest to do so. It's not an anti-trust violation unless they formally collude but it's still collusion and it's still bad for the consumer.

[depakid]

30. Same tired old disclosure platitudes

Did anyone really expect anything different? From a majority of Dems in Congress or from this administration?

Time for a reality check

"New" Democrats sold everyone down the river on consumer issues 15+ years ago. Expecting them to change is like expecting Republicans to become pro-choice.

Something to keep in mind as health care reform comes up for debate.

[avaistheone1]

115. I am beginning to find the moniker of "New" Democrat very repugnant

The "New" Democrats seem to have the neocon mindset and values. Just repackaged and re-branded, but basically the same old puke, and potentially even more perverse.

[andym]

35. A reasonable rate ceiling would be great

A reasonable rate ceiling would be great (prime + 10-15% should be enough profit for any company-- if that is not enough to cover the risk for unsecured credit, then don't issue the card to that person/organization). However, the proposed changes by Obama and congress are not "nothing." They are needed reforms, that I welcome. So I don't understand the "thanks for nothing" comment.

[EmilyAnne]

36. Retroactive anything is going to be off the table. Retroactive punitive taxes, retroactive pay

cuts, retroactive banking terms, retroactive interest rate ceilings...these are all pretty hard to have legal justification for.

[MarjorieG]

38. Congress wants a cap, so that's leverage for better behavior. Still need to make a

profit to become healthy, so it's a balancing act. With Obama teaching them first, then we'll see how tough he has to be. CC Bill of Rights is still going through.

[cwcwmack]

42. hopefully

the congress will add some meat to the Bill.

[HopeOverFear]

43. Actually, Obama DID tell them to quit the sudden rate increases

I just saw the video of him saying that on NBC Nightly News.

[Honeycombe8]

45. Those are two of the main complaints. When they raise rates, they do it so

suddenly that the customer doesn't have time to transfer balances or pay down the debt before the higher rate applies.

And have you ever tried to read the CC contract? Impossible.

Maybe they should also add some sort of ceiling. There used to be "usury" laws about lenders charging absurdly high rates for loans, called usury rates. They were unlawful, even if the rate was stated in a contract and agreed to by the borrower! They could later come back and claim usury. I guess it was considered that the lender had taken advantage of the borrower.

Best way to handle high interest rates is not to borrow, ultimately. When you take someone else's money, they usually have the upper hand.

[babylonsister]

46. How about a link? I'm sure I can provide one, but you should, seeing

as you're all pissed off and shit. :eyes:

[NoSheep]

49. Do you read your credit card junk mail? I received notices from 2 card

companies, both LOOKED LIKE junk mail...the kind you get all the time but both were telling me I had several months to DECLINE the rate increase. I did and was allowed to close the cards and pay off the balance at the rate I had before their announced increase, which was a reasonable rate based on my good credit history. I was pretty blown away. Was going to post it here but was SURE someone would tell me it had already been discussed or just ignore it. YEP. Your president gives a damn about you, whether you read your mail or not. But just in case you aren't lucky enough to have a President that cares about you, if you can't pay the bills, don't get a credit card. Credit cards suck but some times we need them. You have to be responsible though. If you get a credit card, be a conscious consumer of them..

[BlooInBloo]

57. I think Obama should make everything free. If he doesn't, he has betrayed us.

[depakid]

58. How about looking to the prevailing practices prior to deregulation and widespread abuses?

and put together regulations that have enough teeth that the beancounters won't ignore them?

Nah- can't have that (even if it would be a politically and economically astute thing to do).

[BlooInBloo]

59. Ah. I didn't realize there were price ceilings prior to deregulation. Thanks for the info!

[depakid]

60. There were caps to interest- and you didn't see a whole host of exhorbitant late fees

overdraft charges, universal defaults, etc.

Toward the end- WAMU's only real cash flow came from shit like this- to the tune of billions.

It makes perfect economic and political sense to press for comprehensive reforms that turn back the clock- and put corrupted Dems and their Republican allies on the wrong side of the issue.

[avaistheone1]

112. Yes, that is why we used to have Usury laws to protect the public

from predatory lending practices and unreasonable interest rates.

[Bluenorthwest]

63. One fails to realize many things

When one snarks first and thinks second.

[LostinVA]

74. Very dissappinting -- at the very least, anti-usury laws should have been passed

And rates rolled back.

[Political Heretic]

78. Agreed - but I never expected Obama to suggest anything so bold.

My impression of Obama so far is that he is very, very, on the side of plunder capitalist business interests, as evidenced (in my opinion) by his reversal on lobbying rules, chosen plan for addressing the financial crisis, and here again in this basically "for show" meeting with credit card companies.

In better news - Obama's domestic spending priorities are a welcome change!

[LostinVA]

82. True & true!

And, as much as I like Biden, he is buds with the cc people.

[mvd]

84. Hope I'm not naive here, but maybe if he proposed..

everything at once, he'd have trouble getting it through. Just like his approach on other things. I think Obama might be more sly than it seems. I think at the mid-point of his term, we'll have a better idea of the kind of President he is.

[roguevalley]

93. banks are cutting their own throats making credit debt too hard to

pay off, the fuckers. and I have nothing but score for middle to upper management in today's economy.

[mvd]

94. I agree with you

They actually don't like when people pay on time.. something's wrong with that.

[roguevalley]

100. getting smaller amounts over a reasonable time is better than the defaults

and crap they are getting now but they are sick people who don't care about anything but the now, right now.

[avaistheone1]

113. Well at least Obama did say the Wall St bankers were naughty.

He scolded them on tv. I saw it myself.

:sarcasm:

[Lorien]

139. "Bold" isn't the word I would use. "Sensible" perhaps

Politically and economically restoring anti-usury laws and capping interest rates on CCs would have been a win-win, but a loss for the corporate ruling elite who own the rest of us. All common sense flies out the window when it comes to serving the "needs" of our masters at Goldman Sacks.

[Name removed]

80. Deleted message

Message removed by moderator. Click here to review the message board rules.

[rucky]

88. Now we'll know exactly how we're getting reamed.

[nickinSTL]

96. how f'ing useless

what needs to happen is an end to the greed and abuse of the consumer.

This doesn't do it. It allows it to continue.

Totally f'ing useless.

[NYC_SKP]

99. Oh, by all means, lets give free money to everyone in debt. yeah, right, spend my money on it.

I pay my fucking bill in full every month.

You can't legally force a business to undo a contract.

You get involved in credit, it's your responsibility to understand what you are agreeing to.

Requiring contracts to be comprehensible is HUGE and will make it less likely that people will get in trouble again.

This is a change we wouldn't have seen over the past four administrations and you want to whine about it?

:patriot:

[Raineyb]

101. Since when is considering a proposal insufficient to solve a problem considered whining?

If that's your criteria I really have no clue how anything is supposed to be discussed.

This is still a discussion board is it not?

[NYC_SKP]

104. .

OK, whine was harsh.

But asking for retroactive reduction of rates, after the progress we are seeing, sounds a little like, "this ice cream is yummy, but how about chocolate cake?".

What a bank might do is to roll back penalty rates and waive penalty fees, but let's face it, some people who abused credit don't deserve for US to pay them for their bad behavior and let them keep the crap that they bought and didn't need.

[Raineyb]

105. As to the business practices of the credit card companies your complaints are

frankly irrelevant. There are people who run up their credit cards. So what? It doesn't change the fact that the credit card companies are charging interest rates that are excessive and that their business model is dependent on people not being able to pay them off in full at the end of the billing cycle. Clear language stating exactly how the companies intend to screw you over doesn't exactly prevent them from screwing you over at all does it? Credit unions have a limit of 15% on their credit cards why shouldn't the banks have the same?

The point of reforms is to bring the credit card companies into line. I'm not concerned about the potential downside such regulations would have on their profits. They have lobbyists to voice their concerns for them. They aren't paying me for that.

Regards

[NYC_SKP]

106. And I'm not paying for other peoples' mistakes. I am willing to bust the CC companies, however,

for future practices.

That's how it works, not going back in time and trying to break laws to undo what was legally acceptable.

We agree on what to do from here, I think.

We may disagree on the extent to which we can go back in time and rewrite legal contracts.

As I wrote before:
"What a bank might do is to roll back penalty rates and waive penalty fees."

This is being done by banks with mortgages, and I think it's quite reasonable.

I've got a dinner date, have a good evening.

NYC_SKP

[Raineyb]

116. You're already paying for other people's mistakes

It just depends on which mistake you're looking at. I'd say that you're paying for the mistake our government made when they didn't bring the credit card companies into line the way they did the credit unions. You're paying for the mistake of not regulating banks and allowing them to basically gamble with the taxpayers taking up the bill when their gambles went south. Everyone is paying for the use of "easy" credit to replace the raises people should have been getting when productivity went up all these years.

I would much rather pay for the "bailout" of actual people than of these rapacious banks like we're doing now. What's the lesson to be learned by the bank when they can gamble and get the taxpayers to cover their bets? But we're concerned about the people who are being accused of running up too much debt? :shrug: Lots of people have been paying their bills until they got sick or their job disappeared from underneath them. It's usually illness, death of or divorce from a spouse, or loss of employment that causes people to file for bankruptcy in the first place. I don't think that most people are just running up frivolous purchases willy nilly. That sounds like what the credit card companies say to make sure the law continues to allow them to abuse their customers. These are the same companies that offered a card to Thom Hartmann's cat; if they're that lax they only have themselves to blame if some of their customers are chronic deadbeats who run up the bills for no reason and then don't pay the bill. However, this is not the majority of the people involved and I see no reason to take the credit card company's line when making the argument whatsoever. And frankly, without the force of law there is no evidence that the banks will be reasonable at all. They certainly haven't been thus far.

Regards

[Hello_Kitty]

107. We'll see how long you can keep it up if you lose your job.

Like I did nearly a year ago. I used to pay my bills on time too. And even save a little every month. It's all gone now and I'm in debt up to my eyeballs. Luckily, I started a new job recently.

[Tarheel_Dem]

109. Can we wait until we know for sure what was discussed in this meeting...

before falling off a cliff over an o.p. that doesn't provide one bit of evidence, or a single link? I'm with NYC, I pay my bills, and it's become increasingly difficult to hear people whine about contracts they signed, and are now in over their heads.

While I am thankful that I've remained steadily employed, for the past 15 years, I've been unemployed before, and the government didn't bail me out. I have complete faith that the president is on our side, in this matter, but it's really beyond boring to hear the constant clammor of people who didn't get their pony yet.

[cwcwmack]

134. Pony?

Writing and enforcing basic usury laws and principles is a magic pony?

Here's what's happening to people these days... people that maintained low balances and paid fully every month are now using CC's to meet their commitments. They don't have a choice... CC's are being used for food and gas or a cash advance to pay a mortgage.

No ones looking for a pony...

Maybe you'll lose your job next... might teach you some humility, you need some.

[GreenPartyVoter]

122. We certainly learned our lesson after going bankrupt. Of course, we mainly used the cards

to buy food and pay bills and make ends meet because hubby's hours kept getting cut back at work. He did finally get another job but by that time it was far too late and we never could have caught up. :(

I know a lot of people in our area who have gone bankrupt. Not just from CC but for medical and other reasons. It's a tough situation and I think we will continue to hear to hear more stories like that.

[NYC_SKP]

123. It is a tough and an awful situation.

And I hope that anyone who was forced by circumstances to overuse their credit find other solutions.

However, I don't know how many under credit card debt fit this criteria.

For some, the debt comes from buying ridiculous gifts or goodies, clothes and crap, and I don't have sympathy for this group.

So, there would have to be some kind of means testing before I'd feel OK about bailing everyone out.

And, I wrote upthread that CC companies could probably be persuaded to forgive penalty charges and roll back high penalty rates, the way mortgage companies have been doing.

:donut:

[MadHound]

119. With financial institutions being one of the top five donors to Obama's campaign

To the tune of 14 million dollars, did you really expect anything different? Corporations don't invest those kind of big bucks without expecting some serious return. They realize that Obama has got to pay some lip service to "change", but that's about all we're going to get, certainly nothing that is meaningful.

[empyreanisles]

120. What happened to personal responsibility?

No one is forced to run up large credit card bills. They could pay everything off at the end of the month, or simply save up for things and use cash.

[Raineyb]

127. What does this have to do with the credit card companies business practices?

No one is saying that no one has to pay back their debts. (It's not like they're corporations who seem to manage to do exactly that with very little repercussions) but the fact that people may misuse credit cards really doesn't change the fact that their business practices are abusive. People have been saying this for years, it's unfortunate that the shit has to literally hit the fan before anyone was able to get government to maybe take a serious look at this.

Regards

[ecstatic]

140. Call me a capitalist, but plenty of people opt out of credit cards

Those that choose to use their cards, should read the fine print carefully. It's a loan, at the end of the day. All Pres. Obama can do is make sure that the practices are fair. He can't tell a company how to disperse their loans though.

[LostinVA]

133. What does that have to do with usuary laws and predatory practices?

[ecstatic]

141. exactly. I agree with you and I actually had a situation with my

card recently where my rate was hiked up without my knowledge. When I called, the guy was rude. What did I do? I transferred my balance to a company that at least pretended to have respect for me!

[harun]

121. Cap them at 15%

[Skwmom]

128. When there are a lot of typical right wing responses in support of the credit card

companies, that really should tell you something.

[Raineyb]

131. It certainly does.

And it's not good. :(

[ejpoeta]

143. well, they should be able to have rate increases. not 30% though.

and not with these tricks involved. people who have never been late on a payment are being socked a jacked up rate. that is wrong. and messing with due dates to try to get people to be late is downright fraudulent. THAT should be stopped. but if folks aren't meeting their obligations and keeping up with their payments, then the cc companies should have the right to raise the rates. but reasonably. and the person should have an avenue to getting those rates reduced again. and if that cardholder has never been late before and has missed one payment or been late once, they should be given some leway.

i don't personally have a problem with the company punishing those who are continually late. but then they should reward customers who are always on time. the problem is, the credit card companies WANT people who are late. they don't really want people who pay their bills on time every month. or pay off their balance every month. and now they are messing around with due dates and such to invoke late payments and that is just wrong. it's bullshit and that stuff is hwat needs to be stopped. not just make the bills clearer so that when you screw around with the due dates or send the bill 3 days before it is due, or don't send bills at all hoping hte person will forget.... at least they will have gotten a 'clearer' bill.