Obama cracks down on plastic peddlers

"Obama cracks down on plastic peddlers"

IT'S ABOUT FREAKING TIME!

Thank you, Mr. President.

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People are spending more than they can afford and it's the card companies fault?
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This from the man who brought us $4 trillion in debt.
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That's a start. Next Congress should ban predatory mortgage loans. Get rid of variable interest loans. Every time the interest rate goes up, people go under.

I'm sorry, but, unless you lost your job I can see people getting some kind of a stay, Otherwise pay up! I'm tired of paying for losers that spend, spend spend and don't pay. AND using the economy as an excuse!

A lot of the trouble would go away if Congress put a cap on interest rates charged through the instrumentalities of interstate commerce (as that would involve just about every credit card transaction). As of now, all these credit card companies have huddled in a few states that allow them to charge usurious interest rates, and federal law permits them to charge these rates to out-of-state customers as long as the rates are listed in the contract and the customers agree. Capping interstate interest rates, or indexing them to some other market feature, would keep these credit card companies from gouging people.
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And, yes, I suppose some of you might be thinking: “That’s no good because capping interest is an anti-free market regulation. The free market, allowed to operate freely, will remedy the situation because consumer choices will force credit card companies to more equitable practices.” I wish I could agree, but this time I can’t. Most, if not all, existing credit card companies engage in the same practices. There is little or no competition for lower interest rates, or even any incentive to do so. To the contrary, credit card companies have every incentive to keep the rates as high as they are now, or even higher, in order compensate for credit card defaults. In which case, there is no consumer choice to force competition to make the rates go lower.
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Personally, I think the best answer is to take a pair of scissors to all credit cards. Don’t use them. In this day and age, living beyond one’s means is a disaster waiting to happen. I also believe that contracting for the use of a credit card is the same as supporting companies that charge immorally usurious interest rates. Usury use to be considered a sin, a tort, and even a crime in some places. Maybe, at least, the idea that it is a tort will come back.

Just remember citizens, nothing is EVER your fault. If your skin has some color to it, all the better, just more excuses and ways to blame the MAN.

People are spending more than they can afford and it's the card companies fault?
This from the man who brought us $4 trillion in debt.
Posted by: Greg | April 23, 2009 3:17 PM
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Pres Obama is trying to stimulate the economy that your heroes (BushCo) trashed by starting an unnecessary war and giving tax cuts to the richest 2%, big oil and big corporations - all the while doubling the national debt in less than eight years on useless CRAP!

Heckuva Job, Wingnuts!

Credit card companies and payday loan companies have been practicing legalized loan-sharking for years. There is no defending these practices. And, unfortunately, anyone who travels, rents a car, or stays in a hotel needs to use a credit card, or life can be very difficult. The bankster apologists make me sick.

Just remember citizens, nothing is EVER your fault. If your skin has some color to it, all the better, just more excuses and ways to blame the MAN.

Posted by: TA | April 23, 2009 3:57 PM

Did they cancel your KKK meeting today or something?

Right, John W, cut up the cards and use the equity in your home instead for emergency credit..
Oops.... that might be trouble too.
With the prime rate at practically zero percent, they really have no business charging 30% interest.

This should just be the tip of the iceberg. Usery laws should be put back on the books, and a major reform of credit ratings agencies should also be in the cards for the near future. Either way, this is a HUGE first step.

Nice work, President Obama!

I think people need to control their card habits, but I applaud efforts to control the shennanigans of the credit card companies. I paid off one of my cards and closed the account. What I did not know is that by closing the zero balance account, I was mathematically increasing my debt ration. Say if I had before had 4 cards each with 25,000 credit limit ($100k total) and a total outstanding balance of $15k, the debt ratio was 15%. When I closed the one account it jumped to 20% (15/75). The other card companies raised my interest rates even though I was paid current and timely on all of them. That is just plain wrong, and it penalizes good behavior. Thieves are so busy encouraging debt because they make their money off the interest.

There is no reason an accepted business practice cannot be changed by legislative action.

Some states make mortgages non-recourse. There is nothing inherently fair or unfair about it, the states simply felt that it would make their housing markets more liquid (it would encourage lenders to examine the individual houses and it would encourage underwater borrowers to put their houses on the market instead of sitting on their losses for 25 years).

Here we are talking about, among other things, making credit card debt non-call. It is a reasonable regulation, and (I haven't read the text of the bill as it stands) it could easily be made to apply only to new accounts.

These changes will matter most to fairly good credits who have a minor event that could slightly destabilize the family budget. For most people in trouble, it would not do anything because they are buried in debt because they spent way beyond their means to repay.

One reason people get trapped by credit card debt is that the companies are allowed to allocate payments in the manner that they choose and that (this is in the credit card agreement) benefits THEM the most. So, if you have 1000 dollars in purchases at 12.9% interest and 100 dollars in a cash advance from an ATM at 25% interest, all payments will be applied to the lower interest purchases and the cash advance will continue to pile up interest charges.

That practice should end, as should universal default. http://en.wikipedia.org/wiki/Universal_default

These liberals are something else.

Obama is complaining about what the credit card companies are charging and how hard it is to understand their terms BUT WHAT ABOUT WHAT THE FEDERAL GOVERNMENT IS SPENDING OF OUR MONEY AND THE 75,000 PAGES OF TAX CODES THAT NO ONE CAN UNDERSTAND.

He should clean up their act first. He's bankrupting all of us and he's worried about credit cards! We need to teach people to say no to credit cards.

Since many people have lost their jobs, can't refi on their homes because of the tightening of the mortgage market, can't tap into their retirement because it disappeared last year, can't find work and have bills stacking up, credit cards are the only thing keeping them afloat.

They should include increased credit limits and rate caps to people who qualify under a hardship clause.

“With the prime rate at practically zero percent, they really have no business charging 30% interest.”
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Posted by: Flo | April 23, 2009 4:45 PM
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I totally agree, Flo. There is no reason to charge 30%. That’s why I think credit card companies are evil. That rate of interest is considered usurious in many States.
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And BTW - taking out a loan on real property for emergency credit is actually a better option for many because the interest rates on home loans are lower than those for credit card balances.

He's bankrupting all of us and he's worried about credit cards! We need to teach people to say no to credit cards.

Posted by: Alz | April 23, 2009 5:09 PM
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While you were out teabagging your fearless leadership (BushCo) was busy spending the last eight years bankrupting us, Slick.

The damage is already done and now we're trying to fix it. A spending freeze would do nothing but make the Bush recession worse - see Herbert Hoover,

Maybe you should have thought about that when your team (Repuglican) was in the majority instead of standing on the sidelines cheerleading for them.

Alz, if you hate America so much and don't want to do your patriotic duty by paying your taxes, why don't you just leave? I'm so tired of mealy-minded right-wingers whining like spoiled children being told to do their chores when tax time comes around. Do you drive on the roads? Do you rely on the police and fire departments? Do you collect social security? Are you on medicare? Then get off it already.

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Posted by: TA | April 23, 2009 3:57 PM
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I know more than a few people who can’t pay their heavy credit card debts because they lost their jobs. And you know what else? They were white. The problem this country faces with credit use is truly a cultural phenomenon, but it is a cultural phenomenon that cuts across all racial and ethnic barriers. As such, your effort at singling out people of “color” for extra lame is pathetic.

I am a 72 year old senior living on social security. I just checked my master card account and it went from12.08 to 21.99. I called and the women said there was nothing they could do about it. I hope President Obama will make this bill retroactive because a lot of people are getting screwed.

Last year was a very tough year for me finacially. I was paying for daycare that came unexpectadly due to illness to my mother and the hike in gas pricess. Between the two I buried in a cc balance that I'm not proud of but have been paying more than my minimum. Recently my company changed their the dates that I get paid from every 2 weeks to a 1st and 15th. My Chase CC due date was on the 28th of each month. The first time I was late happend in December because of this change and paid it on the 1st. January was coming due and I knew I was going to have a problem. I asked them to change my due date if possible. I was still late for the 2nd month in a row by 3 days. Chase changed my interest rate from a 7.9% to a 24% and said that I could not have it reversed even though I never had a problem in the past. Now I have to deal and pay their 24% till I can find another way out of this mess. This was unfair. I can understand the increase but more than double?? I'm sorry but it wasn't very fair to me.

“As such, your effort at singling out people of ‘color’ for extra lame is pathetic.”
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Posted by: John W. | April 23, 2009 5:41 PM
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Oops! I meant to say "blame," not lame. Maybe it was a Freudian slip for what I thought of TA's post.

I have no faith in Obama or the banks to do the right thing. The question I want answered is how can a bank decide to charge a higher interest rate than the one originally agreed to when the card was issued? I understand that penalty rates apply when a person is late paying their minimum but if a person is making the minimum payment how can a bank legally start charging a higher interest rate. Even Tony Soprano didn't do that.

Oh you poor liberals!
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The companies forced you to apply for the card.
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The companies forced you to spend on them.
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The companies forced you to spend more money than you could afford.

The companies never told you about the interest. Just because they made you initial the line on the application that spelled out the rate, that's no excuse.

The President has decided that poor idiots are not responsible for their lots in life (as long as they remain his majority voting base). It is the rich and Bush that are to blame.

Double edged sword, John W.
It's great having a 2% equity LOC, but if I get laid off, I can lose health insurance and my house both. So the advantage of credit cards is that they don't have the right to foreclose you.

There's a reason credit card fees and rates are high. Credit card loans are risky to the banks. Even in good times, they lose 5% off the top. In bad times like now, loss rates go into the double-digits.

As it stands now, about half of credit card holders carry a balance. Those people subsidize the other half of people (like me) who pay off every month. How else do you think the card companies can pay for all the rewards, and the processing of all the small transactions? If fees and rates are capped at too low a level, expect to see increases in the fees banks charge to merchants, which will mean fewer merchants will take the cards (or will raise their prices). Also, expect to see annual credit card fees return.

Bottom line...do not carry credit card debt. I learned that as a child from my parents...apparently others have not figured out this concept. Not my problem if you can't get it.

Fraud and Wingnut,

The tax cuts of 2003 and the spending on the war have nothing to do with the recession we are experiencing.

The housing bubble is the cause of the recession. The housing bubble was cause by the over-regulation of the mortgage market. The gov't telling the banks who to make loans to. Good job Barney Brothel.

Teresa,

When you have nothing, scream racism.

Queston to all dems: how long does the statute of limitations last for Bush and Co.? Six months? A year? Eternity? How long will "W" and his administration take the blame for every wrong, real or imagined? I didn't even like the guy, but people...that was then; this is now. Get over it! Your guy is running the show now. What are you going to do when it's four and out for the current administration? Who, then, will you blame for everything?

Why are some of you making comments about race? It has absolutely nothing to do with President Obama's message to the credit card companies. In addition, why are some of the conservative posters inferring that it is the liberals who are overspending their personal budgets? "Conservative" is a very broad term. In my experience, many who are liberals with regard to social policies tend to be conservative on fiscal/monetary policies. Some of the most conservative people I know are on welfare or disability, but are only conservative on issues like abortion or domestic partner benefits.

It's clear to me that some of you are trying to push a separate agenda and are trying to use this issue to encourage people to act based on how they "feel" rather than look at things objectively and do what will bring the most utility for ALL Americans. In real life, America is not as polarized on issues of race, gender, economics, and foreign policy as it appears to be when reading these discussion boards. There are many shades of gray.

Btw...I agree that usery laws should be re-established and enforced. Banks have been allowed to run amok for decades (you can't blame it all on Bush). The problem I see is that in a global economy, free-market capitalism does NOT serve the best interests of our country. It serves the best interests of individuals. Unfortunately, even those with low/middle incomes are heavily vested in the prosperity of these multinational corporations. Handcuffing them is akin to cutting off our nose to spite our face.

Adjusting to the current economic times by voluntarily adopting a lower standard of living and not allowing our nation to rely so heavily on frivolous spending will produce the best long-term results.

Recently I recieved a letter (from Bank of America) notifying me that my
Commercial credit card had been "re-evaluated" and due to the fact that I
was making my payments "as agreed" that they would need to decrease my
credit limit from 20,000 to 9,900 because for the last several months I
had only made the minimum payment or better. Timely none the less. This
week I get another letter from Bank of America that they would be
increasing my interest rate from 8.9% to +16% because I had been making my
payments as agreed. I called them and they stated that they would be happy
to consider me for a 'rate reduction' and an 'credit limit increase'. I
don't want that, I just want what we had agreed to at the start. This was
not an adjustable rate card (except in the case of default). This is
illegal and cannot be tollerated. I have not missed a payment or been late
on anything in 9 years and average credit score is 700. Clearly all of us
are affected by this ecomonic slump and I have been affected but somehow
have been able to float through it so far. If they continue to change the
rules none of us will make it. Would you do what you can to raise the
consciousness of this issue. We need the Banks that we are bailing out NOT
to change the rules and be allowed to put the screws to the authors of
their life line. This is just too far.
Click on this URL to take action now
http://capwiz.com/consumeraction/utr/2/?a=11689531&i=93205689&c=

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Posted by: Terry | April 23, 2009 7:43 PM
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I have had very few occasions to agree with “Teresa,” but this time she’s right. TA’s post was racist and, thus, deserves no defense. I mean, how else, other than racist, do you describe TA’s statement, “If your skin has some color to it, all the better, just more excuses and ways to blame the MAN”?

How about a blanket amnesty for credit card debts?
Or.....
How about forcing the banks to pay a decent rate of interest on deposits and CDs?

It's ridiculous to tie up $200,000 for a year in a CD that pays less than 2% interest. Should we keep our savings in our mattresses?

The tax cuts of 2003 and the spending on the war have nothing to do with the recession we are experiencing.
Posted by: Terry | April 23, 2009 7:39 PM
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Yeah and pigs can fly too.

Thanks for playing, Turdy.

Get over it! Your guy is running the show now. What are you going to do when it's four and out for the current administration? Who, then, will you blame for everything?

Posted by: Tom | April 23, 2009 8:51 PM
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Tommy,
It's going to take longer than three months to clean up the messes that the BushCo Republicans made the last eight years. In fact we're probably still going to be in the process of cleaning up the mess your BushCo Republican team made 25-30 years from now.

Get over it!

Oh you poor liberals!
The President has decided that poor idiots are not responsible for their lots in life (as long as they remain his majority voting base). It is the rich and Bush that are to blame.

Posted by: Greg | April 23, 2009 6:32 PM
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Do you have some research that you want to show us that says that the only people who are overdrawn on their credit cards are "liberals" or are you just going to stay silent thus admiting that you're talking out of your arse?

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Posted by: Greg | April 23, 2009 6:32 PM
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Your points really aren’t well taken because they don’t address the problem. How do you justify the rate hikes in cases where card-holders haven’t defaulted on payments, and when they didn’t agree to the rate increase when they signed up? The card companies have been unilaterally changing the terms of the agreement without notice. Do you think that’s fair? I don’t.
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It actually gets even more complicated. A person facing a rate hike can opt out of the higher rate, but only by closing the account. True, they get to pay the lower rate until it is paid off, but they also lose the credit card and closing the account can hurt their credit score. So, you see, the consumer then gets punished for following the original terms of the agreement. The credit card companies stand to win because they are allowed to force this Hobson’s choice on those who need the use of a credit card.
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Or how do you justify the usurious interest rates credit card companies charge? Some people started off with a non-default rate of 8% to 12%. Now, even though they have not defaulted, and have kept current on their payments, they now have to pay 24% to 30% on the previously incurred balances just to hang onto the card. I think the rates are unconscionable. They would be considered illegal in many states. That’s exploitation; not good faith business.

Posted by: Greg | April 23, 2009 3:17 PM

ALL credit card commercials basically advertise it as FREE MONEY. The worst of these marketing practices is on college campuses. That would be a good starting point. Make it illegal to advertise on all college campuses.

Posted by: Greg | April 23, 2009 6:32 PM

You are really missing the point. Are there NO conservatives in the whole country struggling with finances?

The culture that needs to change is the attitude of BUY NOW, PAY LATER. The credit cards are very deceptive in how they make everything seem so easy.

And in a struggling economy, all of sudden the day-to-day items that you paid for with cash (groceries, gas, etc.) go to the credit card. And a $20 minimum payment is $100 minimum payment before you know what's happening.

Posted by: Greg | April 23, 2009 3:17 PM

Congratulations, Greg. You even have John W defending "liberals". Not much else needs to be said about your moronic diatribes.

Terry,
"Overregulation of mortgage markets" caused the housing bubble? Hilarious!
And someone put a gun to bank executives (who run the country) and said "you have to make bad loans"? Priceless. And Barney Frank brought down the world economy? Man, there is no end to the crap you'll throw out there in defense of unbridled capitalism gone awry. Fortunately, the pugs couldn't find enough ignorant sheeple to buy into the lie, even with Faux News leading the way.

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Posted by: syj | April 24, 2009 12:09 PM
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That’s funny. I didn’t know I was defending “liberals.” Thanks for pointing that out. I don’t understand how this could be turned into a “liberal” versus “conservative” debate. After all, the credit-card companies have been cheating everyone in a very bipartisan manner.

I didn't mean that literally, John W. Just that one of Greg's first lines to his post was "Oh you poor liberals!" Making it seem as if only liberals are struggling in the economy. Guess I just saw your post as a bit ironic, but only in regards to Greg's post.

John W,

You were correct, I din't notice Teresa was confronting a racist rant. My apolgies to her.

Trickled-On You,

Pigs can fly is the best you got? Grab some bench, you gone!

dts,

Bot literally a gun, but in order for banks to do mergers and expand into the insurance area as GLBA allowed them (passed 90-8 and 362-57 and signed by Clinton), they had to loosen up their mortgage market to those who would not have qualified.

Brothel Barney just enabled and hid the problems that Fannie and Freddie, the safety net of the mortgage market, were having.

If you have a better theory and want to name the Bush policy that led to this, please chime in

Terry, The Ownership Society; the Iraq War, Ben Bernanke for starters.

Terry--I suggest you see the webcast of CNBC's 'House of Cards' and get a clue. I don't have time to try and deprogram you of your Faux News- induced-stupor.

Stewie's Stuufed Animal,

How did the Iraq war cause this recession?

The Ownership Society was a goal - tell me the law that he signed that pushed people into houses they could not afford?

Bernanke wasn't one of Bush's best appointments, but the Fed does operate independently from the three branches of gov't.

I’m a small business banker. Every day I sit in my office and I deal with small business owners... think revenue under $10 million and often revenue under $1 Million... and I see their faces as they come into the bank, letter in hand, wondering why their credit lines were frozen.

These business owners typically employ 5-30 people. Chase Bank recently sent out approximately 35,000 letters in two days advising their customers that their working capital lines have been frozen. These were for lines under $100,000. If we average it out and say 35,000 lines at $50,000 each, that would mean that Chase Bank froze about $1.75 Billion dollars in credit lines that are used to keep employed .... let's call it 175,000 people, at a minimum. And Chase is not alone in this systematic reduction of credit to the small business community.

In this case, though, Chase is attempting to convert interest-only working capital lines into five year, self amortizing term loans because the borrower’s revenue and income has deteriorated and the bank has a need to grab some of that money while the getting is good. Please understand that many of these clients have not even missed a payment. But these credit lines are not lines that can be sold off through securitization. They are lines that the banks hold on their books and shedding these credit lines will result in bolstering the banks capital.

These lines had minimum principal payment requirements of 1% of the outstanding balance. So a $50,000 loan had to pay $500 principal payment. When the bank converts it to a five year term loan, that payment increases to $833 a month. Additionally, when they term it out, they raise the interest rate. They had granted these credit lines at ridiculously low rates to suck them into taking them in the first place: typically floating rates of Prime + 1 or 2%. Now they are increasing the rates to ranges of 7.5% to 10%, which of course increases the business owner’s required monthly payment even more.

Let me make this clear to President Obama. Not only are the banks NOT making business loans to Small Business owners (I don’t want to hear about their multimillion dollar loans to big business), they are systematically withdrawing credit from the small business market.

In addition to these lines of credit, many of these small business owners financed their business’s needs through credit card lines. As you have so eloquently pointed out regarding consumer credit card lines, these business owners, too, are buckling under the strain of increased rates and frozen lines of credit.

When our President is rallying our Congressional leaders in support of his positions on credit card reform, he may want to share these observations from the front lines of the banking world and perhaps they too will begin to understand and start to work on behalf of the small business community, a group that will play a vital role in steering our country out of this economic crisis.

Queston to all dems: how long does the statute of limitations last for Bush and Co.? Six months? A year? Eternity? How long will "W" and his administration take the blame for every wrong, real or imagined? I didn't even like the guy, but people...that was then; this is now. Get over it! Your guy is running the show now. What are you going to do when it's four and out for the current administration? Who, then, will you blame for everything?

Posted by: Tom | April 23, 2009 8:51 PM

Well, let's see. All during Bush's presidency we had "all Republicans" (and if you get to blame "all dems" then blaming "all Republicans" becomes a fair exchange) blaming Clinton and Carter for any and all ills you decided to heap on them and, in fact, the occasional snipe is STILL coming up. You abided (abided? abode?) by absolutely no sense of "that was then, this is now" during ANY of the time of Bush's administration. Certainly, you don't deserve the grace of such an allowance if you were never willing to grant it to us. So, if Carter's presidency ended in 1981 and Bush's ended in 2009, then my estimate on a statute of limitations would be 28 years, or the minute Bush, Cheney, Gonzalez, Rumsfeld, Rice and Rove get frog-marched off to prison (a real one, not one of those white-collar minimum security country club things), whichever comes first. Or maybe "when Hell freezes over" might just be the appropriate time period. That work for ya there, junior?

They thought the party would never end.

The Washington insiders.

Paulson, his successor Blankfein, Ace and his successors, Fuld, they never learned from the South Sea Bubble, the Tulip Bubble, the dot.com Bubble, and on and on.

Who decided to take the punch bowl away and scatter the drunken celebrants onto the cold, hard streets?

How easy is it to start a panic, anyway?

Well, first make sure your own personal wealth and that of your buddies is pretty secure. Treasuries, prime real estate, really primo stuff.

Then let the fun begin.

Starve the Beast big time.

As long as the Democrats are going to be taking over the clubhouse, might as well wreck it and take some of the good silver and paintings with you on your way out.

Isn't that right, Hank?

My issue is shortening grace periods and taking longer to get bill into the hands of the customer. I heard nothing to address this issue. Chase has reduced to 20 days and most recent bill took 9 days to get to me. Due date is 10 days before close date. If not to invoke late fees and interst, Why?

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