Editore"s Note
Tilting at Windmills

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

May 2, 2008
By: Kevin Drum

CREDIT CARD REFORM....The Washington Post reports that the Fed plans to crack down on the credit card industry:

The Federal Reserve and two other banking regulators are set to unveil today one of the most aggressive efforts in decades to crack down on the credit card industry, prohibiting practices such as arbitrarily raising interest rates on outstanding balances.

The proposed regulations, which could be finalized by year's end, would label as "unfair or deceptive" practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment. When different interest rates apply to different balances on one card, companies would be prohibited from applying a payment first to the balance with the lowest rate.

I've been so beaten down by seven years of Bush/DeLay/Rove Republicanism that I'm willing to be happy about pretty much any advance in social justice, no matter how small. So one cheer for the Fed. However, I haven't been beaten down enough not to note that (a) these appear to be only the most minimal possible reforms, (b) they are most likely being implemented in an effort to stave off more serious efforts from Democrats, and (c) Bush and congressional Republicans have stonewalled those more serious efforts for years on end.

Also: details matter. I'll wait to see the wording of the final rules before I uncork the champagne.

Kevin Drum 11:47 AM Permalink | Trackbacks | Comments (27)

Bookmark and Share
 
Comments

Oh please. Whatever is proposed will APPEAR to help the public. In actuality it will surely be a boon to credit card companies. "Deluded" is apt if describing those thinking Bush gives a damn about the little guy. Any benefit to cardholders will be an incidental side effect of the legislation or proposed rules

Posted by: steve duncan on May 2, 2008 at 12:02 PM | PERMALINK

This is the Fed, which is not, technically speaking, part of the Bush administration (at least it's not part of Democratic administrations).

Posted by: David in NY on May 2, 2008 at 12:02 PM | PERMALINK

There are currently four major bills establishing consumer credit card rights working their way through Congress. You can find out more at www.opencongress.org.

Posted by: Ron Byers on May 2, 2008 at 12:03 PM | PERMALINK

And I'm sure the Credit industry lobbyists will be out in force to make sure even the most minimal reforms do not get through.

Instead, I can see forces from MBNA, Washington Mutual, and similar nation-wide banking concerns pushing to allow for indentured servitude so that it becomes impossible to escape any debt (whether unsecured like credit-card debt or secured as in mortgages and home-equity debt).

Ended up owing $200,000 on a house now worth $100,000? No more escape through bankruptcy! INstead, you and your family will be allowed to work off your debt at WAMU's new call center and filing center. Yes, you, the wife, and the kids can man the phones 24-7 to deal with people just like you--people who can't pay and will soon be joining you as part of the new corporate slavery brigade.

Posted by: Derelict on May 2, 2008 at 12:05 PM | PERMALINK

The Fed and "two other banking regulators"

Oops. Appears the Fed is in conspiracy with the Administration on this one (correcting comment from above).

Posted by: David in NY on May 2, 2008 at 12:07 PM | PERMALINK

Oh, stop whining. I just clicked on the ad immediately above this post and learned that I am pre-qualified for credit card offers! How cool is that, huh?

Posted by: thersites on May 2, 2008 at 12:09 PM | PERMALINK


I'm willing to be happy about pretty much any advance in social justice, no matter how small.

http://www.youtube.com/watch?v=4_wKOgMNs0U


Me Too

Posted by: Cornbread The Ghetto Legend on May 2, 2008 at 12:10 PM | PERMALINK

When did usury cease being a crime for Christians? Instead of fixating on abortion and homosexuality, maybe the Christian right should throw the money changers from the temple.

Posted by: jen flowers on May 2, 2008 at 12:13 PM | PERMALINK

The Fed has our social security numbers. The Fed should create a personal discount window, and trade consumer bonds on the market. Let the world bet on us, and tell us what they really think.

What the fuck is going to happen when a bunch of Phd's, all taught against price fixing, suddenly engage in monopoly price fixing?

Posted by: Matt on May 2, 2008 at 12:16 PM | PERMALINK


I suppose it would be gauche to point out that typical patterns of credit-card use demonstrate that average American has the common sense of a goose.

Posted by: gcochran on May 2, 2008 at 12:18 PM | PERMALINK

my question is -- is this retroactive? my rates have already been jacked up several points and i've never had a late payment and always paid double+ the minimum.

this is bullshit to make it appear they're doing something on behalf of the consumer.

Posted by: linda on May 2, 2008 at 12:30 PM | PERMALINK

Chuck Schumer and Chris Dodd will ride to the rescue to put a stop to this "reform" nonsense.

Posted by: jrw on May 2, 2008 at 12:34 PM | PERMALINK

When did usury cease being a crime for Christians? Instead of fixating on abortion and homosexuality, maybe the Christian right should throw the money changers from the temple.
Posted by: jen flowers on May 2, 2008 at 12:13 PM

The people gouging us on credit cards are not practicing Christians, they are Republicans and who ever said the "Christian right" was Christian?

Posted by: Ron Byers on May 2, 2008 at 12:36 PM | PERMALINK

who ever said the "Christian right" was Christian?
And when were they ever right?

Posted by: thersites on May 2, 2008 at 12:55 PM | PERMALINK

It is really interesting that one of these very same credit card companies is advertising on this page.

I think it would be really easy to say, "Oh, well, we don't really control what ads go up there," but let's face it, it's hard to get all righteous about the credit card companies when these very same credit card companies are putting money in your pocket.

I think it's more honest to admit that, yes, the credit card companies use slimy tactics, but that also, yes, Washington Monthly benefits from these slimy tactics.

Posted by: BombIranForChrist on May 2, 2008 at 1:10 PM | PERMALINK

I've started getting my credit card offers. This is great news for Optical Weenie -- I think can get herthose shoes she wants for a Gas Tax Holiday present, after all.

Posted by: thersites on May 2, 2008 at 1:15 PM | PERMALINK

Thersites -I've changed my mind about the shoes (woman's prerogative) and have decided that I would prefer to get hardwood put down in my living room and dining room. Price difference is prolly minimal. And you wouldn't even notice it, since it appears that you are financially capable of affording to get tailor-made keyboards for each day of the month (I want the bronze age one).

linda - there is a way to make the intereste rate go down on your credit card. Pay your bill in full, every month and charge as minimal as possible. Since I've been doing that my interest rates have decreased!

Posted by: optical weenie on May 2, 2008 at 1:37 PM | PERMALINK

Pay your bill in full, every month and charge as minimal as possible

Easier said than done. D'you think they'll take the shoes back?

Posted by: thersites on May 2, 2008 at 1:54 PM | PERMALINK

As long as you haven't worn the shoes and scuffed the soles I think you can take them back.

Posted by: optical weenie on May 2, 2008 at 1:58 PM | PERMALINK

How about no interest rate above 10% or 15% a year? How about reinstating laws against usury?

Posted by: Anon on May 2, 2008 at 2:09 PM | PERMALINK

I watched some of the recent Congressional hearings on this and the testimony from individual and small business customers was appalling-- I couldn't believe many of the industry's most egregious practices were even legal. Here's a brief rundown of just a few of them.

My favorite was the woman who paid all of her credit card and other bills on time without a blemish but whose interest rate tripled for no apparent reason. Even Congressional investigators couldn't figure it out at first and the company itself wasn't talking. The unearthed reason: she was offered immediate discounts to open a retail store credit card on premises and she did so. Her credit company tripled her rate because, simply by opening the new account (which she also promptly paid), she was now a bigger credit risk. Like Universal Default, there is simply no excuse these sharks will not use to squeeze usurious interest rates and bogus fees out of people who can afford them least.

Posted by: R. Porrofatto on May 2, 2008 at 2:21 PM | PERMALINK

And I'm sure the Credit industry lobbyists will be out in force to make sure even the most minimal reforms do not get through.

Since I'm sure no one has learned a damn thing from the credit collapse that's going on right now, I'm absolutely sure that the credit card companies will jump in and make that crisis even worse by trying to show one more quarter of profit.

You'd think that simple self-interest would make them think twice, but apparently not.

Posted by: Mnemosyne on May 2, 2008 at 2:41 PM | PERMALINK

Wow. Forbidding charging interest on debt that doesn't exist or assessing late fees before you send out the bills. In other words, forbidding practices that when not undertaken by people with large lobbying staffs would be known as mail and wire fraud. What an enormous step forward.

Watch for the one about applying payments to the lowest-interest balances get diluted or litigated. Extremely profitable.

Posted by: paul on May 2, 2008 at 2:56 PM | PERMALINK

How about no interest rate above 10% or 15% a year? How about reinstating laws against usury?

That's class warfare. We don't do that here.

Weenie, I broke a heel on one of the shoes showing them to the guys at the office here. Your flooring will have to wait until I get two or three more credit card offers, okay?

Posted by: thersites on May 2, 2008 at 4:19 PM | PERMALINK

Identifying these practices (such as raising rates for no reason) as "unfair and deceptive" could be pretty big. The states have consumer fraud laws that allow multiple damages and attorneys fees where business practices are unfair and deceptive. This means lots of lawyers will be able to represent people who are now not defended when the credit card companies tighten the screws.

It also should help screw these banks in bankruptcy courts when other creditors who are not unfair and deceptive get priority.

The main thing we need is a federal usury law - 18% or less. Half of the banks will just get out of the business at that point.

Posted by: Xenos on May 2, 2008 at 6:09 PM | PERMALINK

Why is the Fed implementing consumer credit reforms and not Congress?

Oh.

Yeah, right. Nevermind...

Posted by: jpmist on May 2, 2008 at 10:53 PM | PERMALINK

I'm behind the curve on this, since I am just now reading Krugman's "Conscience of a Liberal." Keven, you are correct on all acounts here. It isn't Republicans, per say, but "movement conservatives:" those who have carjacked the GOP, who want to return us to the Gilded Age, who despise democracy, who use the fascist tools described by Naomi Wolf...

When I see the "Bush/DeLay/Rove" conjunction I search for a more direct and conclusive terminology. If I take Krugman's "movement conservatives," it seems the popular bloggers and press prefer analogy by individual example: John Dean uses some "a" word (too many come to mind), Wolf uses fascists (and largely proves her point), others simply name exemplars, such as Ailes and Rove, references that fade with time and age. Then there are the politicians who swear by Eric Tollaverse's "Using the Passive Tense to Avoid Confrontation and Accountability" in which there are lists of catch phrases, sound bites, mea culpas, pseudo terms, secret religious keywords, and ... well, it would be a best seller.

I really appreciate Krugman's NYTimes op-eds and his book has explained why he is so down on Obama: 1) He doesn't think a black person can win a national election in this country, and 2) Rational, law-abiding, honest people, (call us Democrats) need to win or freedom and liberty, the Grand Experiment of 1776 will surely end!

So, what do we call this cabal?

Well, they are Kristol clear in origen and pedigree, but "The Crystals" is beyond even their ability to frame. Any Friedman could aspire to the wealth and power an invisible hand offers; yet graft, corruption, profiteering, incompetence, cronyism, nepotism...No, they will not be called the Freedmens.

Any kind of combination with "con", as in neocon (or in this administration, convict) is possible, but to gain prominence, press, and acceptance this new term should use ~ism or ~ist as a suffix. "Movement conservatism" is just too bland.

The Olinistas? I'll think on it, but need to catch up on some mundane chores right now.

Posted by: Bob Johnson on May 3, 2008 at 10:05 AM | PERMALINK
Post a comment









Remember personal info?










 

 

Read Jonathan Rowe remembrance and articles
Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

Advertise in WM



buy from Amazon and
support the Monthly