by Al Falafel
This morning I am hearing the news about Chris Dodd's Credit Card Reform Legislation which was passed in the Senate yesterday. Under this bill certain predatory practices would be outlawed. In particular, those skyrocketing rates that the Credit Card companies spring on consumers after luring them into their trap with irresistibly low introductory rates will no longer be allowed.
Of course the Repugnicans are against it.
The reporter may have been paraphrasing the official Repugnican talking points on this. She said that their opposition is based in the expectation that such legal limitations would be ineffective since the Credit Card companies will obviously "have to make up the difference somewhere."
The idea is to stop the outrageous rip-off practices of Credit Card companies.
But Repugnicans insist that ripping people off is not only a right of the free market - for Credit Card companies it IS their business. If you try to regulate them by outlawing those surprise spikes in interest rates they will have to make up the difference somewhere . . .
They'll surely find some other way to rip us off!
The rantings of an unrepentant old leftist, and his friends.
Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts
Friday, May 22, 2009
Monday, March 16, 2009
The Financial Crisis (An Explanation That May Help)
by Dick Mac
Linda is the proprietor of a bar. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.
She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Linda's bar. Taking advantage of her customers' freedom from immediate payment constraints, Linda increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Linda's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide.
No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices are still climbing, a risk manager at the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Linda's bar (he, of course, is fired due to his negativity).
However the drinkers cannot pay back the debts. Linda can not fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.
The suppliers of Linda's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties and vested interests. The funds required for this purpose are obtained by a tax levied on non-drinkers.
Thanks to jendi for sending this along.
Linda is the proprietor of a bar. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.
She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Linda's bar. Taking advantage of her customers' freedom from immediate payment constraints, Linda increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Linda's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide.
No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices are still climbing, a risk manager at the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Linda's bar (he, of course, is fired due to his negativity).
However the drinkers cannot pay back the debts. Linda can not fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.
The suppliers of Linda's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties and vested interests. The funds required for this purpose are obtained by a tax levied on non-drinkers.
Thanks to jendi for sending this along.
Monday, February 25, 2008
Now That The Mortgage Industry is a Failure, How Long Before the Credit Card Industry Follows In Its Footsteps?
The website cardratings.com provides consumers with information about credit card companies and provides a tool for comparing credit card offers.
The deregulation of the banking industry over the past 25 years has left Americans trapped in a culture of corporate anarchy with all the rules slanted in favor of business, and consumer protection diminishing like civil liberties in a fundamentalist administration.
Banks who provide credit card services have turned-up the heat in the credit industry.
The first step in the plot to enslave American consumers was bank deregulation, which consumers embraced as the keys to a new freedom as promised by the Reagan Administration. Anyone who warned against (or still speaks out against) the dangers of bank regulation was (and is) considered a crack-pot, or an alarmist, or worse: unpatriotic!
Consumer protection advocates warned that interest rates would skyrocket if the industry was deregulated; and corporate apologists, like Ronald Reagan himself, stood before the American people and promised that deregulation would lead to more competition, lower rates, higher profits, and more jobs, all because the industry would flourish when deregulation was removed.
What has happened? Exactly what consumer protection groups, leftists, and many economists predicted.
There are fewer banks, fewer jobs, less competition, and the highest interest rates in the world.
The next step in the plan of enslavement of the American consumer was the gutting and re-establishment of the bankruptcy laws. Both my senators, Chuck Schumer (who's never met an anti-consumer bill he couldn't love) and Hillary Clinton (a shill for corporate America who rivals George W Bush in her absolute disdain for the American people) whole-heartedly supported the re-writing of the bankruptcy laws. Of course, the laws were only changed to remove protections for consumers. The bankruptcy laws protecting corporate interests are alive and well and shielding billionaires from exposure to liability for poor decisions made.
Come forward now the few banks that remain since conglomeration and merger have eroded our options and employment opportunities.
Bank Of America recently raised the interest rates of its cardholders from 9% to as much as 28% for anyone who didn't stop using their cards and pay-off their balances. Historically, this stunt has been pulled only on those who have had late payments. In this case, however, Bank Of America has imposed this unfair interest rate on consumers with perfectly decent credit histories.
This is the final assault on consumers. This is perfection of the plan to enslave the American consumer. Charge everyone an insanely unfair interest rate and watch your profits soar.
Some credit card companies are worse than others.
New Millennium Bank of New Brunswick, N.J., offers a secured card that charges almost $200 for access to your own money.
First Premier Bank of South Dakota, offers for a gold MasterCard with 9.9% interest rate, then charges $256 to open an account with a limit of $300.
Total Visa from Plains Commerce Bank of South Dakota, sells a card that begins with a 19.92% interest rate and a start-up cost of $200 for which you receive an initial $250 line of credit.
I got this information for the article Card Sharks, by Liz Moyer with Tatyana Shumsky at Yahoo! Finance.
So, what can we do? Start living within our means. Stop using our credit cards. When we must use credit cards, pay the full balance immediately. Elect politicians interested in restoring consumer protection laws. Tell your elected officials, especially those in Washington, that you want them to work for consumer protection. If you don't speak up then they don't know you care.
Dick Mac Recommends:
I Am America
(And So Can You!)
Stephen Colbert
The deregulation of the banking industry over the past 25 years has left Americans trapped in a culture of corporate anarchy with all the rules slanted in favor of business, and consumer protection diminishing like civil liberties in a fundamentalist administration.
Banks who provide credit card services have turned-up the heat in the credit industry.
The first step in the plot to enslave American consumers was bank deregulation, which consumers embraced as the keys to a new freedom as promised by the Reagan Administration. Anyone who warned against (or still speaks out against) the dangers of bank regulation was (and is) considered a crack-pot, or an alarmist, or worse: unpatriotic!
Consumer protection advocates warned that interest rates would skyrocket if the industry was deregulated; and corporate apologists, like Ronald Reagan himself, stood before the American people and promised that deregulation would lead to more competition, lower rates, higher profits, and more jobs, all because the industry would flourish when deregulation was removed.
What has happened? Exactly what consumer protection groups, leftists, and many economists predicted.
There are fewer banks, fewer jobs, less competition, and the highest interest rates in the world.
The next step in the plan of enslavement of the American consumer was the gutting and re-establishment of the bankruptcy laws. Both my senators, Chuck Schumer (who's never met an anti-consumer bill he couldn't love) and Hillary Clinton (a shill for corporate America who rivals George W Bush in her absolute disdain for the American people) whole-heartedly supported the re-writing of the bankruptcy laws. Of course, the laws were only changed to remove protections for consumers. The bankruptcy laws protecting corporate interests are alive and well and shielding billionaires from exposure to liability for poor decisions made.
Come forward now the few banks that remain since conglomeration and merger have eroded our options and employment opportunities.
Bank Of America recently raised the interest rates of its cardholders from 9% to as much as 28% for anyone who didn't stop using their cards and pay-off their balances. Historically, this stunt has been pulled only on those who have had late payments. In this case, however, Bank Of America has imposed this unfair interest rate on consumers with perfectly decent credit histories.
This is the final assault on consumers. This is perfection of the plan to enslave the American consumer. Charge everyone an insanely unfair interest rate and watch your profits soar.
Some credit card companies are worse than others.
New Millennium Bank of New Brunswick, N.J., offers a secured card that charges almost $200 for access to your own money.
First Premier Bank of South Dakota, offers for a gold MasterCard with 9.9% interest rate, then charges $256 to open an account with a limit of $300.
Total Visa from Plains Commerce Bank of South Dakota, sells a card that begins with a 19.92% interest rate and a start-up cost of $200 for which you receive an initial $250 line of credit.
I got this information for the article Card Sharks, by Liz Moyer with Tatyana Shumsky at Yahoo! Finance.
So, what can we do? Start living within our means. Stop using our credit cards. When we must use credit cards, pay the full balance immediately. Elect politicians interested in restoring consumer protection laws. Tell your elected officials, especially those in Washington, that you want them to work for consumer protection. If you don't speak up then they don't know you care.
Dick Mac Recommends:
I Am America
(And So Can You!)
Stephen Colbert
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