Congress to Screw Your Credit

[cannon_fodder]

So long as they are not giving them a bailout . . .

I will not use a card with a fee on it unless some reward is guaranteed to over compensate me.  I will not use a card with less than a $5,000 limit.  I will not pay interest on a credit card (no grace period). If those terms change, I will simply use my debit card and risk more fraud (which the banks pay for from the consumer side).

There are two things going on here:

1) An industry that set up its own rules is now complaining because those rules allowed them to take too much risk and they got burned.

2) Congress is again "protecting" the American people, who have apparently becomes so stupid they don't understand credit cards.  Every college kid since 1990 has been told that credit cards can be trouble and you need to pay attention.  Suddenly no one knows this.  Because of YOUR stupidity my good credit will be punished. 

Which is nice.

[Conan71]

So long as they are not giving them a bailout . . .

I will not use a card with a fee on it unless some reward is guaranteed to over compensate me.  I will not use a card with less than a $5,000 limit.  I will not pay interest on a credit card (no grace period). If those terms change, I will simply use my debit card and risk more fraud (which the banks pay for from the consumer side).

There are two things going on here:

1) An industry that set up its own rules is now complaining because those rules allowed them to take too much risk and they got burned.

2) Congress is again "protecting" the American people, who have apparently becomes so stupid they don't understand credit cards.  Every college kid since 1990 has been told that credit cards can be trouble and you need to pay attention.  Suddenly no one knows this.  Because of YOUR stupidity my good credit will be punished. 

Which is nice.

Your point of "every college kid since 1990..." brings to mind an important point.  These credit crises are cyclical.  Banks get permissive in their lending.  They get hosed with a lot of foreclosures or credit card defaults, they tighten up their policies, run to the government for protection and remuneration, then they are encouraged to start lending more liberally again, they get greedy, ask the gov't to back off regs or turn a blind-eye and the cycle repeats.  Rinse, spit, repeat.

The difference this time is that Wall Street set up a huge casino for insurance companies and other large investors to go gamble on whether debt would be re-paid or not.

How was the fishing?

[rwarn17588]

I was listening to the Clark Howard Show last night, and it was pretty remarkable what he had to say.

He called the legislation an "overwhelming victory for the American consumer." Clark describes himself as a "dyed-in-the-wool capitalist" and espouses the self-corrective nature of capitalism.

However, Clark said the banking industry has "lost its moral compass" and that Congress had essentially left it with no choice but to intervene and stop the industry's shenanigans. He said that credit cards are profitable enough that if you run them ethically, you still will make a big pile of money. But, instead, credit card companies jacked up interest rates without notice on an existing balance, set payment due dates on a Sunday, sent out billing statements two days before a payment was due, etc., etc., etc.

Clark is no bleeding-heart liberal. But it was obvious he was disgusted with the credit-card industry, and the new laws were a punishment it deserved. And having known a few people who encountered the sort of sleazy tactics I described above, I'm inclined to agree.

[Conan71]

I was listening to the Clark Howard Show last night, and it was pretty remarkable what he had to say.

He called the legislation an "overwhelming victory for the American consumer." Clark describes himself as a "dyed-in-the-wool capitalist" and espouses the self-corrective nature of capitalism.

However, Clark said the banking industry has "lost its moral compass" and that Congress had essentially left it with no choice but to intervene and stop the industry's shenanigans. He said that credit cards are profitable enough that if you run them ethically, you still will make a big pile of money. But, instead, credit card companies jacked up interest rates without notice on an existing balance, set payment due dates on a Sunday, sent out billing statements two days before a payment was due, etc., etc., etc.

Clark is no bleeding-heart liberal. But it was obvious he was disgusted with the credit-card industry, and the new laws were a punishment it deserved. And having known a few people who encountered the sort of sleazy tactics I described above, I'm inclined to agree.

Other analysis of this legislation suggests that there are many card-holders who may now be deemed uncreditworthy and their cards will be cut-off.  Remains to be seen.

I can't remember who the company was now, but about 10 years ago, Clark helped lead the charge on a company which was purposely holding onto payments and posting them after due dates.  I had one of those cards and I would send in my payment 5 to 10 days prior to the due date.  I started getting hit with late charges and/or interest even paying the balance in full.  I called customer service and was told it was not their fault if the mail service was slow.  That was total BS, it takes 2-3 days max. for first class mail to make it to either coast or anywhere in between.  I cut the card up after four or five months of their behavior.

At any rate, there was eventually a class-action suit.  I don't recall how much I got back out of it, but I don't think I was completely compensated.  I'm sure the class attornies got millions and I probably got a gift certificate to Steak & Ale.

[rwarn17588]

Other analysis of this legislation suggests that there are many card-holders who may now be deemed uncreditworthy and their cards will be cut-off.  Remains to be seen.

Howard talked about this, too. He thinks it'll be a wash.

He says the people who will get cut off from credit cards had highly dubious ability to pay on their debts anyway. Banks lending to people with a poor ability to repay is one of the big reasons the world financial system is in big trouble. Banks being careful of who they lend to is a good thing.

[Conan71]

Howard talked about this, too. He thinks it'll be a wash.

He says the people who will get cut off from credit cards had highly dubious ability to pay on their debts anyway. Banks lending to people with a poor ability to repay is one of the big reasons the world financial system is in big trouble. Banks being careful of who they lend to is a good thing.

Yep, that would have averted this disaster in the first place.  Just wait though, the discrimination crowd will start bellowing  once credit starts getting cut off.  Just the man standing on the heads of the poor folk once again.

[cannon_fodder]

Hey wait, I thought the MAN was being mean to the poor folks and keeping them down by allowing easy access to credit?

Damned if you do . . .

[Gaspar]

Who is the MAN? 

Started as a broad term for "the white man."

Evolved during the 60s and 70s into a term for anyone that imposes rules or laws upon a person or group of people: "I'm being hassled by the MAN".  Also used to address friends: "Hey man"  (not to be confused with "Hay Man" who was just off to see the Wiz).

Became a complementary term in the 80s for anyone that was of great assistance: "you Da' Man."

In the entitlement drive during the 90s it morphed back into a derogatory term for someone who won't give you something you want:  "I'm being held down by the MAN"  or "Can't get nuthin from the MAN".

In the 2K era the MAN has retired for the most part.  We haven't heard that term frequently used.  Bush became emblematic as a symbol for liberal hatred and a need for ambiguous terminology was lost.

Who is the MAN?

[Conan71]

No, he's "The Man"

[cannon_fodder]

"Damn the man."

[Townsend]

"Damn the man."

Kudos for "Empire Records" reference.  Those are rare.

[Gold]

Pretty good article from the Economist regarding the bailouts.  http://www.economist.com/printedition/displayStory.cfm?Story_ID=13648968

At some point, it seems to me that our economy went from innovation and delivering quality products and services to simply gambling.  True, there is always risk is business, but it seems like so much of the windfall profits and the mess that followed were simply a result of legalized gambling on a macro-scale.  I don't like that.