Tuesday, February 15, 2005

Consumers be Damned – A Misanthropic Rant

I've come to the belief that banks are not in the business of banking. They're in the business of collecting fees.
Patrick C. Kelly, sales executive

From the Washington Post: Republican leaders in Congress began clearing the way yesterday for swift passage of legislation backed by the credit card industry and opposed by consumer groups that would make it harder for consumers to wipe out debt through bankruptcy.

What I despise about this administration and narrow-minded politicians is that they truly don’t give a second thought about their follow human being unless they are bent over in a prone position – meaning that there is someway to pick the consumers’ pockets.

The bankruptcy bill that is before Congress is absolutely bad news for consumers. However, it is good news and more profits for the banks. Credit card companies now have the right to raise their rates to a mafia-style vig if someone is late on their payment, not just to the credit card company, but to even to a utility service. They can raise the rate up to 21 percent or higher without notice. This is after they have done all they can to get you to sign up.

The money-people have found a friend in the White House. Congress has tried repeatedly in recent years to pass similar legislation in what would be the most significant change in bankruptcy law in more than a quarter of a century. Twice in the last seven years, bankruptcy bills have passed both the House and Senate, only to face ultimate defeat. In one case, President Bill Clinton refused to sign the legislation, saying it was unfair to consumers.

I am not ranting about this for me. I have an 800 credit score despite some rather steep financial hardships I have overcome. I have sympathy for people who are down on their luck. This economy is not one that provides a lot of confidence in job security. If you do lose your job, don’t expect to make the same wages when another opportunity comes around – it will most likely be less, if you can find a job.

If the Senate allows this bill to pass, they should also start to rein in the credit card companies and the banks to make far more restrictive laws to curb the predatory marketing habits of these financial behemoths. They are getting their proverbial cake and eating it too – suckering people into debt and then making them pay an outlandishly high interest rate that ensures the principal will never be paid off.

Every month I receive a sleeve of blank checks from the credit card company despite my phone calls asking them not to send it. I am afraid someone might steal my mail or that the mail carrier will deliver it to the wrong address, which is how I meet most of my neighbors as we deliver each other’s mail.

Kind and decent, hard-working people may find themselves pulled under by credit card debt. No problem, the bank will give them a home equity line of credit. What happens when they can’t pay this euphemistically named second mortgage? I will tell you, the house will be sold out from under them. But who cares, right? They did it to themselves. Wrong! This should not be a a war of all against all, powered by individual cunning in the pursuit of wealth and power to just live a simple life, but the Republicans who want no government protections will simply let the people lose their homes. It is a shame and a crime.

According the Washington Post, consumer advocates say it would allow some rich debtors to continue to hide wealth through homeownership while bankruptcy relief would be denied to many people with low or moderate incomes who have fallen on hard times because of illness, job loss or divorce. They say credit card companies must share the blame for increased bankruptcies because they aggressively market products and inadequately disclose how interest rates and penalty fees mount up. For example, eliminating a $1,000 credit card balance paid off at a rate of 2 percent a month and carrying an interest rate of 17 percent would take 88 months, or more than seven years.

"Our overall concern is that this isn't a balanced bill," said Travis Plunkett, spokesman for the Consumer Federation of America, a nonprofit consumer research and advocacy group. "There isn't a single curb on abusive lending practices by credit card companies in these bills."

He said he finds the industry's claim it needs bankruptcy reform puzzling because credit card issuers "continue to offer credit to Americans in record amounts" and have reported, as a group, one of their most profitable years in more than a decade.

I contend that this and other bills that favor corporations pass because people have no sense of history and forget how greedy corporations had to be reined in by government controls (and still need to) in order to protect consumers from monopolistic and predatory practices.


On The Mark said...

One of the most disturbing things about this bill is the fact they can raise interest rates because one was late on a utility bill (as you pointed out). That speaks to privacy issues, too.

Maybe this bill will come back to bite them in the ass. Maybe more people will keep zero balances or cut up that pre-approved credit card offer.

But really, the scariest thing is when you add up what your house really costs once the mortgage and all the interest is paid off. Except for possible capital gains, to say one owns a home is a false reality.

The Misanthrope said...

I was also thinking that this bill could hurt them, if people wise up and stop buying what they cannot afford. This would also mean more layoffs since items would not be selling. And, of course, then they would not be performing their patriotic duty as President Bush suggested--shopping.