Senate Considers Relief for Credit Card Holders

[RamboLiberal]

Source: Washington Post

Expanding a debate on whether the government should to do more to help embattled consumers, a Senate Judiciary subcommittee this morning began hearing pros and cons of a bill that would provide relief to holders of credit cards with exorbitant interest rates.

New regulations issued by the Federal Reserve targeting predatory lending practices by credit card companies are scheduled to go into effect next year. The bill, introduced in January by Sens. Sheldon Whitehouse (D-R.I.) and Richard J. Durbin (D-Ill.), is aimed at giving more immediate relief to consumers struggling with mounting debt and tightened access as the credit crisis helps fuel the economic downturn.

"The standard credit card agreement gives the lender the power to bleed their customer through evolving and ever more crafty trick and traps," Whitehouse said. "Under this business model, the lender focuses on squeezing out as much revenue as possible in penalty rates and fees, pushing the customer closer and closer to the edge of bankruptcy.

Sponsors say the bill would give consumers with high interest rates and on the verge of financial collapse a powerful tool to negotiate a lower rate with their credit card companies. Under the bill, lenders with high interest rates would get nothing if their customers file for bankruptcy.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/24/AR2009032400808.html?hpid=topnews

[Fresh_Start]

1. the problem with this is that they have already

decided to protect the major credit card issuing banks....
if they cut the banks revenues by reducing interest rates, the frail hope of the banks rebounding will die

[DJ13]

3. ... and if they dont fix the credit card racket the consumer market dies

Which would be worse?

(Hint, the Fed has the power to loan directly to consumers should banks refuse.)

[Fresh_Start]

6. I'm just saying we should count on pouring more money

into the black hole.

I think the consumer is more important.
I'm not sure what my government thinks.
Obviously I have lots of evidence that my government cares more about big business than it cares about the consumer.

[DJ13]

8. The government has been a protection racket for the financial industry

..... since Reagan.

The easiest solution to protecting consumers would be to reimpose usury laws on the credit card industry, capping rates at a reasonable level above Prime.

The fact that these Congresscritters are dancing around that simple fix, while trying to sound like they actually care about consumers, is a red flag that they have no intention of really protecting consumers at the expense of their partners in the banking industry.

[pattmarty]

2. Simple fix for this. NO RATES TO EXCEED 18% . Look at all..........

..........the other bullshit fees and charges they charge and stop or cut MOST of them. And last but not least, FUCK ALL THE CREDIT CARD COMPANIES!!!!!!!! These creeps put the mafia out of the usury lending business!!!!

[BadgerKid]

4. Funny how consumers get screwed over bankruptcy

while the credit companies/bank get comparatively lighter treatment.

[Matariki]

5. How about restoring eroded usury laws?

and putting a legal limit on interest rates?

[county worker]

7. We should fix the rates at 10% or less. Payments are do on a certain day of the month every month.

If you want to pay a card off we should convert the balance to a amortizable schedule like a car loan. And the interest should be tax deductible like before Reagan.

My payments may be do on the 1st one month and the 29th the next month!

[msongs]

9. no cross referencing other financial problems with a user's card - ever....

this deal where the thieves can jack up interest rates because you have missed a payment somewhere else not related to that card oughta be criminal. oh wait, congress allowed card companies to do that.

well maybe congress can bite the hand that feeds it and change this.

Msongs

[radfringe]

10. F**K "negotiate" lower rates

Cap the rates - %x over prime.

[No Elephants]

11. About damned time. The limit should be X% over the prime rate. When the prime rate is almost zero,

even 18% is ridiculous. On the other hand, if the prime rate is 9%%, 18% may not be so bad.


Whenever you borrow anything else, you get the going rate at the time. Why should credit cards be different?


And, if your credit card is in good standing, a default on your mortgage or other borrowing should not result in an increase in the credit card rate.


Twenty days is also too short because, IMO, they lie about when they receive your payment. To be absolutely sure that my payment gets credited to my account in time, I either have to mail payment the minute the bill hits my mailbox or pay it in person at a BankAmerica branch. That's ridiculous.

Will they do things like this? Is there a tooth fairy?

[benld74]

12. I can recall being able to deduct the interest paid on cards on income taxes,

They took that away in the mid 80's, leaving only mortgage interest deductable

[Occulus]

17. LOTS of that went on in the '80 re: the IRS

I remember my mom keeping ALL of her grocery receipts and, at tax time, totaling up the amount of grocery purchases so they could be deducted from the tax return.

We need a return of that as well.

[MaineDem]

18. Exactly, And car loan interest, too.

I remember that well.

[Sherman A1]

19. You and me both, but

as much as I took advantage of that deduction I think it was wrongheaded and encouraged people to run up higher balances.

I prefer not to have credit card debt and don't by simply paying off the balance each month.


I wasn't always able to do this, but now interest and fees are a poison to me and I avoid them at all cost.

[David__77]

13. Won't the credit dry up if this is done too stringently?

Rates are risk-related. I'm not even pro-capitalist, but recognize that there would be serious consequences to doing this. It's fine, but no more easy money for households that are struggling. Who's gonna extend it to them at low rates?

[mbperrin]

16. No. Conventional credit will become cheaper. Perversely, the higher rates

are encouraging lenders to emphasize the far riskier cards than less risky and less profitable (but still profitable) conventional loans. By narrowing the return and increasing the risk of lending via credit card, the available pool of funds will increase for conventional lending.

Struggling households don't need more leveraged money. They need to increase income or decrease expenses. The stalling tactic of amortizing current expenses is one of the reasons for the current meltdown.

[David__77]

20. I agree.

At the same time, it is a day of reckoning of sorts. It's gonna happen one way of the other, and we need to quit trying to paper over it at all costs.

[SoCalDem]

23. There was a time when you went to your BANK to get a loan for a vacation

or a large household purchase.. they were called signature or personal loans..


But that was also back when banks had a lot of lobby personnel, and they were eager to loan to their small custoners:)
People also used to arrange car loans at the bank and THEN go shopping for a car.. They did not rely on the car dealers to "get them a loan"..

[dkofos]

14. Talk is cheap. I don't expect the senate to roll over on their cash cow for the people.

But they can prove me wrong.

Or not.

[jimlup]

15. In the mean time...

The credit card companies will rape us for everything they can get.

[antimatter98]

21. Ask VP Biden, he voted FOR CC deregulation. n/t

[tavalon]

26. We know this and the tides have turned

He danced with them that brung him only now it's us who brung him and he and the rest of Congress will need to dance with us.

[SoCalDem]

22. A computer analysis should be required for all people with balances

If they have paid enough to cover the actual costs of what they bought, the banks should be forced to drop the rest, and close the account & call it even..

For people who obviously cannot "afford" to pay it back (due to job loss etc).. they should add up all they bought, slap a one-time 10% interest charge on it, freeze it in place, and allow them to make payments that actually reduce (payback)...but no charging anymore

A re-boot..

Banks need to get the "toxic debts" off their balance sheets, and this is a great way to do it, and it helps the :little guy" too..

[WriteDown]

29. So basically free money?

"If they have paid enough to cover the actual costs of what they bought, the banks should be forced to drop the rest, and close the account & call it even."

I'd be up for dropping the interest rate to a certain level above prime, but no free money. I'll end up paying roughly twice the price of my home loan when its all said in done and no one is rushing to forgive the interest portion.

[Scout]

30. was the interest rate on your mortgage raised to double or triple the original? n/t

[WriteDown]

31. No, and I made sure of that when I signed the mortgage. nt

[Massacure]

24. The government should offer to 'roll over' peoples credit card debt.

Once the government pays the credit card company off, then the cardholder should continue paying the government at an interest rate a few percentage points above prime.

That would help a lot of people.

[tavalon]

25. I want them to drop the rates to help the little guys

but the credit card companies I want to crash and burn for just this reason - they behaved like loan sharks and it's time to make sure they get kneecapped.

[Norquist Nemesis]

27. House subcommittee hearing on this is on CSPAN

Just clicked to watch it. :)

[4_TN_TITANS]

28. "Senate Considers Relief for Credit Card Holders"

now that they've gotten the headline, my bet is that's as far as it will go, any takers?