If Obama wanted to turn economy around, he'd push for capping credit card interest rates

[brentspeak]

No, the Credit Card 'Bill of Rights' signed back in May (and tailored by Repubs and the DLC to give the banks several months to screw customers before the law's actual implementation) http://banking.senate.gov/public/_files/051909_CreditCardSummaryFinalPassage.pdf">doesn't address the key issue of usurious interest rates. THAT issue was brought as a bill by Bernie Sanders to the Senate floor in May -- and http://thecaucus.blogs.nytimes.com/2009/05/13/senate-rejects-limit-on-credit-card-interest-rates/">predictably defeated.

However, the rate-cap issue can always be revisited at any time. Most people probably weren't even aware that Congress was considering capping rates. Obama, who gave no public support for Sanders' bill, could easily give himself high approval ratings if he very vocally stumped on behalf of capping card rates. Even a few of the tea-baggers would be forced to admit they'd like the idea of not having to pay more than 14% interest on their credit cards.

[Skittles]

1. he could easily have done a lot of things

but he won't

[Honeycombe8]

3. I guess those cos. own Congress. I can't believe the usurious rates they get away with. It's like

loan sharking.

Except when you don't pay, they don't break your thumbs. They force you into bankruptcy.

[phleshdef]

10. The fact that you used the word "easily" illustrates just how naive you are.

[zeemike]

13. More likely it's can't

Just try taking away this very thing that makes people mega millionaires and see what happens.
Power is not in his hands and we need to get use to that Idea if we have any chance at all of changing it.

[Honeycombe8]

2. How would that help the economy? Just askin'. I see how it would help some debtors.

But...how would the $ saved from interest help the economy?

Would the debtors then spend the $ they don't spend on usurious interest?

[brentspeak]

4. Even if debtors wouldn't spend more, it would help prevent/stem the looming disaster of

http://www.huffingtonpost.com/2009/09/15/jpmorgan-chase-credit-car_n_287573.html">a gigantic avalanche of credit card delinquencies and yet another wave of bailouts.

[Honeycombe8]

31. What makes you think there's an avalanche of delinquencies coming?

I haven't heard that in the news. At least no more than there have been in the past year.

[valerief]

5. I wish some civilized country would invade us and bring us democracy. nt

[harun]

9. I predict a lot more people are going to start saying this!

[geek tragedy]

12. Our paranoid crazies are sounding more and more like Freepers.

Some housecleaning to be done.

[valerief]

29. Bless the Ignore button! nt

[TomCADem]

6. While A Rate Cap Wouldn't Hurt, Is The Solution More Debt?

I don't think the long term solution is for Americans to go shopping more with lower interest rates.

[brentspeak]

11. Rate cap would help people get out of debt

People can't meet their regular bills, let alone feed their families, if they're saddled with 30% credit card bills every month. Small business owners can hardly operate if they can't get out from under usurious debt.

[jeanpalmer]

7. A cap would give the consumer a needed break

They say they want the consumer to ramp up spending, but then they let the credit card companies rip off his income. And these companies are being supported by the taxpayer.

I just got a notice that the maximum rate on my card from BofA is being raised to the prime + 27.74%. Currently, that amounts to 30.99%. LOL. How can usury of that magnitude be allowed. At that rate, or even lesser rates, credit cards make no economic sense. They're just scams. They ought to be abolished. People can get by without them; and if they can't, they're just getting screwed -- it's legalized theft. It's up to the government to protect people from scammers like Madoff and BofA. For convenience, debit cards would suffice.

There's about $2.5 trillion in credit card debt, so the extra interest taken out of people's incomes with these usurious rates adds up to quite a sum, in the hundreds of billions. JP Morgan Chase derives 25% of its revenue from credit cards, and let's face it the credit card holder is an easy mark for these banks.

Thank god I only use my credit card for the miles, and other than that don't need it.

[TheKentuckian]

8. That's fine but the heart of it is to either break up the banks so they can fail or to

nationalize them.

Until one of those two actions are taken we are in deep, deep, deep doo doo.

[HamdenRice]

14. It's not yet a federal problem, it's North Dakota's

I think the problem is that it would take a much broader overhaul of banking laws for the federal government to regulate credit card rates.

Ever notice how many credit card companies, even those issued by major New York banks, say in the fine print that they are based in North Dakota?

It's because credit card rates were somehow made a state issue. At some point in iirc the 80s, banks were allowed to issue cards across state lines.

What then happened was a classic "race to the bottom" with states competing to get the credit card processing business. North Dakota, a relatively poor state, won the race to be worst, and allowed unlimited usury.

Regulating credit card rates would now take a complete overhaul of banking, credit card issuance across state lines, or federalizing of interest rates. That is going to take a long time, and can't be done as a one-shot bill.

[brentspeak]

21. No, that's wrong. An across-the-board card rate cap can be applied right away

As the Sanders bill clearly outlined: http://thomas.loc.gov/cgi-bin/bdquery/D?d111:1:./temp/~bdim60:@@@D&summ2=m&

[HamdenRice]

24. Just because Sanders introduced it doesn't mean it's constitutional

The issue is: why did others oppose it. I'm assuming because they think it violates federalism.

[brentspeak]

25. .

"why did others oppose it. I'm assuming because they think it violates federalism."

:wow: :spray:

[ipaint]

32. South Dakota.

South Dakota a Favorite State for Credit Card Companies
By: LawInfo
Published: 05/2008
Do you ever wonder why your Citibank credit card bill comes from South Dakota, and your payment goes there as well, when you know that Citibank is headquartered in New York?

http://resources.lawinfo.com/en/Articles/Credit-Card-Gift-Card-and-E-payments/Federal/south-dakota-a-favorite-state-for-credit-card.html

[HamdenRice]

33. Sorry, you're right! It's SD, not ND. I knew it was one of them,

Thanks.

:hi:

[ipaint]

34. No problem

After reading the article I linked to it seems consumer protections that worked quite well pre 1978, the year the supreme court stuck their pro-corporate noses into the law, are the very same protections some now think will stifle lending.
It's all well and good to put the blame squarely on overextended borrowers but at some point we have to realize that consumers are human with all the flaws that come with it and if deregulating an industry eventually causes massive collapse or abuse in every increasing numbers, no matter who is to blame, it is in the best interest of the health of the country to make sure consumers in overwhelming numbers are not forced or coerced in a myriad of ways to borrow more than they can repay should the economy or jobs dry up. The fact that credit cards substituted for real wage growth for the last two decades sets up an enormous segment of the population for failure.

Of course that means corporations/shareholders/wall street would have to operate under stricter regulations for less profit in order to protect consumers.

We seem to be well past the time when people understood corporations are never to be trusted- ever, or left to self regulate.

[merh]

15. yes, he likes it that the economy sucks.

it makes his job so much easier. :sarcasm:

[wicket]

16. I recced this but still below zero

:eyes:

[geek tragedy]

19. It's deserves every unrec it gets.

It's just another in a long line of whiny "I hate Obama" rants from the OP.

[Hamlette]

17. cap interest rates and you tighten credit, denying it to those who might need it most

unless of course you want to nationalize banks and subsidize people who charge shit they don't need and can't afford on their cc's and then don't pay it back. In other words, theft.

[Bluenorthwest]

18. Steaming piles of bull

The jack up rates and tighten credit at the same time. Usury is theft. Not in other words, it simply is theft.

[Hamlette]

20. right, people who live beyond their means should do all the thieving. Banks should be happy to

go broke supporting them.

The current credit crunch is a result, in large part, of the burst in the real estate bubble.

Interest is not theft. It is paying your own way. Don't like the high interest rates? Don't charge shit on your credit card.

This talk about low interest feeds our addiction to over consumption, to living beyond our means, to the irresponsibility of many to "just charge it".

[brentspeak]

22. Not being able to charge rates of over 15% constitutes "theft" in your world?

Despite all the hundreds of billions of dollars in revenue banks have generated for themselves by slapping 20-30-40% interest rates on their customers, how come banks aren't extending credit to anyone?

Point us to data which correlates usurious interest rates and subsequent extension of credit "to those who might need it most". Point us to information which proves that even at least, say, 15% of all cardholders now saddled with high interest rates on their debt accumulated that debt by purchase of non-essential goods or services.

[and-justice-for-all]

23. Would be nice, since I al getting hammered by CitiFi...nt

[Aramchek]

26. he already turned the Economy around, moran

[andym]

27. I like the idea of caps, but they won't help the economy unless

the bill that creates a credit cap limit, also prevents the cc companies from dropping people currently with high interest rates.
Because the probable response of the cc companies would be to drop the people with the highest credit risk (who have the highest interest rates)-- not lower their credit rate. Without credit, these people won't spend. Therefore, there needs to be some kind of immediate prohibition from dropping people-- not sure whether that's realistic.

In the end, caps will help people manage debt. But in the short term it may actually reduce credit which a lot of people would not be too happy with.

[iceman66]

28. I agree.

It is certainly wrong that credit card companies are allowed to charge interest rates that for anyone else would be considered criminal usury!

[scheming daemons]

30. Obviously, Obama prefers a shitty economy....

:eyes:

[scheming daemons]

35. Cartoon describing the attitude of the OP:

[ecstatic]

36. Or....if a CC company wants more than 14%, don't use the card?

:shrug:

[brentspeak]

37. How would that apply to people who have an existing balance

and whose line of credit was cut off anyway? A retroactive rate cap would be the only way for many to finally get a chance to escape crushing debt.