Taxpayers should DEMAND a cap on lending rates in exchange for funding the bailout.

[Matariki]

A cap on mortgage rates - you know, something like 7 or 8 percent max.
A cap on credit card rates.
A cap on those 'payday loan' places.
etc, etc.

Or in other words - regulation.

[Cleita]

1. Best idea yet Kineta.

Also, maybe they could write a whole tome of regulations for those industries when we have to bail them out, starting with going back to the Sherman anti-trust laws.

[Matariki]

2. Thanks. It seems like an OBVIOUS idea, yet I haven't heard it brought up yet.

Got to figure out a way to push it.

[Matariki]

3. kicking my own thread to urge people to write their congress critters

We're bearing the burden of this bailout. We deserve to get SOMETHING for it.

We need to DEMAND regulation and a cap on interest rates, including LOWERING existing rates that have reached obscene levels.

Wouldn't folks be less likely to default on loans if interest rates weren't criminally high? Wouldn't regulation and caps on interest rates have protected the system from crashing on itself in the first place?

[safeinOhio]

4. Lets save the credit card industry

from itself and cap rates at seven and a half percent. The banks not caught up in the subprime are now in CC trouble.

[Matariki]

5. Maybe write to Moveon if you're a member.

I'm doing that now.

[melm00se]

6. ok, put a cap on

loans to consumers. here are a few things to ponder:

1) will there be a similar cap on Federal Funds rate?

you'd need both because if the federal funds rate get close to or goes above the consumer capped rates, then absolutely no lending will occur.

And if a cap is placed on the federal funds rate, you limit a valuable weapon against economic slowdown and inflation.

2) you would probably see a severe limit on lending to anybody but prime A borrowing candidates. Any body with shaky or questionable credit/job situations would find it extremely difficult, if not impossible to borrow money.

think it thru...

[Matariki]

9. Cap would be x% over prime I would think.

I don't agree with your second point. Charging loan shark type rates because someone has "shaky or questionable credit/job situations" is one of the main factors that lead to the crash.

If someone's financial situation is THAT BAD then they shouldn't be going into debt in the first place. They might need help, but not from banks or credit card companies who DON'T have their best interests at heart.

[melm00se]

11. I didn't say anything about

"loan shark" rates. I am not talking about folks who shouldn't be lent the money for a stamp but rather the difference between credit scores of 690 and 710. the difference between a couple of late payments.

hypothetical situation:

you have 2 borrowers and you only have enough money to lend to 1:

borrower A has a 20% greater chance of defaulting than borrower B. due to regulation you can only charge 10% difference in rates between the 2 (B gets 9%, A gets 10%, the legal maximum). From a pure business decision, who are you going to lend to?

As a former bank loan officer, the answer is easy: borrower B. the risk vs return equation doesn't work in the favor of borrower A. So, over time, borrowers like A get boxed out.

[Matariki]

12. 24% to 30% rates ARE loan shark rates

And that's what the credit card companies are charging many people

A cap doesn't mean a single percentage difference. But something reasonable HAS to be put in place.

I think it's naive to think that regulations would force credit card companies to curtail their business to a very limited pool of borrowers.

[yurbud]

7. send to Obama, Biden, your congress cowards:

Find your senators & Congressman:

http://www.visi.com/juan/congress/index.html

Obama campaign:

http://my.barackobama.com/page/s/contact2

[Selatius]

8. Somehow, I don't think Joe Biden would support a cap on credit card rates at all.

After all, the Delaware state legislature changed the law to allow companies in their jurisdiction to charge exorbitant rates, and he represents Delaware. It's why Delaware is so popular a destination as far as credit card companies go.

[Matariki]

13. That's a good point. And begs the question as to why usary laws are set at State levels?

With the national taxpayer bailout, we need to demand national regulation.

[Selatius]

14. You'd run into the inevitable issue of "states' rights" once again.

The Supreme Court ruled that a credit card company is only subject to the usury laws in the state in which they are incorporated, not the usury laws in the state a customer resides. With this decision, many credit card companies relocated almost overnight to Delaware and South Dakota because they removed the usury cap on interest rates, essentially, or they moved the cap up so high as to be irrelevant. These states then saw an uptick in business with these large corporations moving into their jurisdiction.

[Matariki]

15. Yeah well, it's obviously time to change that in this regard.

It's going to take a lot of work to get Congress to enact any real reform.

Meanwhile the treasury gets bled and future generations of Americans will face third world type debt. Which further corrodes our infrastructure and decent public education and it's a downward spiral.

We need to ACT NOW. While they're deliberating in Congress this weekend.

[BraneMatter]

10. And...

If the taxpayers buy the mortages, then they are the landlords of all those people who are defaulting? Right?

I say we just give the poor bastards those houses, or at least cut their payments by at least half!

Then, let's throw some CEO's in jail, and bust up those financials that are just "too big to fail."

Next, take all those who wrote the bad sub-prime loans to court, and fine the hell out of them in an amount equal to the phony mortgages they wrote. Or else it's jail time for fraud.

The idea is to make this all so unpleasant that it doesn't happen again.


The politicians should also pay a price, but I guess that is just a wet dream...

[McCamy Taylor]

16. This would be a very popular idea with voters. Not with the banks. However

it would be the kind of thing which we, the taxpayer could demand. With interest rates down, consumers would have more cash to purchase which would stimulate the economy.

[RB TexLa]

17. Are you related to organized crime loan sharks? Seems to be the only reason one would want

to so limit what legal lenders can do would be to drive business to illegal lenders.

Do you want them to call it the "Kneecap mortgage bill"???

[Matariki]

18. delete / duplicate

[Matariki]

19. Did you forget the sarcasm tag?

[RB TexLa]

20. No, honestly do you have an Uncle or something that always has a couple of

300 pound "associates" with him?

[Matariki]

21. That makes so little sense it's actually funny.

[RB TexLa]

22. It's the only rational reason one would propose something like what you proposed.

Past that, I'm not really concerned with what irrational reasons you have for it. It's easier to deal in reality.

[Matariki]

23. Let me get this straight - you're arguing that if banks can't charge 30% interest

the logical result of that is that people are forced to use loan sharks?

Why would that be? People are addicted to high interest rates? Banks would prefer no customers to regulation? What?

Instead of personal attacks, make a real argument for that crazy assertion you're making. Otherwise you're nothing but flame bait.

[RB TexLa]

24. Default interest rates exist because some people do not pay off their debts. Money is sold at a

cost. If you are buying money from someone the interest is the cost and how much you pay is determined by your history of paying money and the lenders history of being paid by people with the same financial situations as you. A default rate on credit cards is a determent for people who might default to not default. Remove that and you would have more people defaulting, so to prevent that the banks would not extend credit to those people. And if those people need the money they will find someone to loan it to them.

Since you want regulations that would prevent banks and other legal lenders from extending them credit you must have someone in mind that you want to get that business. Or as I said, you have some irrational reason for wanting to do that to them.