Good luck with this one:
President Obama threw his support on Thursday behind legislation that would keep banks from imposing higher fees and interest rates on credit card users, and said terms must be “written in plain language and be in plain sight.”
“The days of any-time, any-reason rate hikes and late-fee traps have to end,” the president said at the White House after meeting with top executives from the nation’s largest credit card companies, a session Mr. Obama called “constructive.”
“No more fine print, no more confusing terms and conditions,” the president said, following up on campaign pledges to try to curtail high fees and rates and chop away at the thickets of fine print in credit card statements.
***Industry lobbyists have been working closely with Senate Republicans to try to block the passage, although the White House’s recent push for the measure could make that difficult. During the presidential campaign, Mr. Obama made an issue of what he considered excessive credit card fees, but until this week he had been largely silent on the matter since his arrival in Washington.
I’m betting meaningful and substantive credit card reform legislation will be as hard to pass as health care or card check. I can already hear the screams, and half the Democrats are in as deep as any Republican.
TenguPhule
2 Democrats are in the CC’s pockets.
Vs all of the GOP.
Just Some Fuckhead
Did Biden really say that? And didn’t MBNA move outta Delaware or something when they were acquired by Bank Of America in 2005?
John Cole
@Just Some Fuckhead: Of course he didn’t say that.
Brachiator
I just received a revision to my credit card terms. I’m afraid to read it fully, but I’m pretty sure that some parts mention “blood from a stone” and “first born child.”
But you are absolutely right. The lobby’s are going to apply all the pressure they can on both sides of the aisle, and call in every favor they can.
The interesting Obama/Jedi trick on this one: it will be interesting to hear conservative pundits plea for the right of credit card companies to rape the consumer.
Just Some Fuckhead
@John Cole: Hmm.
MikeJ
Oh noes! He waited three whole months in a four year term to get to one of a million things that need to be addressed. This isn’t change we can believe in! Surely *this* is good news for John McCain.
scav
And won’t we just love hearing them plead for the ability to do pre-emptively to us what they’re yelping about TARP doing to them when spelled out at the beginning. It’s that mid-sentence spin-cycle kicking in again, ARRRGGG!
SGEW
It’s pretty audacious how big Obama thinks his plate is.
Seriously: what major industry is he going to try and reform next?
[Please oh please by the military-industrial complex! Killing the F-22 is only trimming the leaves, not healing the roots.]
r€nato
To the extent that Obama and Congress can curtail and/or eliminate some of the more sneaky and diabolical practices of the credit card industry – like universal default, jacking up interest rates for ridiculous reasons such as the cardholder living in an area which has a high rate of defaults even if the specific cardholder is in good standing, slashing credit lines below what the cardholder has already charged and then charging them for being over their credit limit – I’m all for this. Long past due.
But, you know, every single credit card solicitation I’ve ever received has this big box of text in big letters which clearly state the terms. I’ve read them frequently. They are not that hard to understand.
I’m all for making credit card companies state the terms clearly and plainly so that it doesn’t take an attorney to interpret them… but if people aren’t willing to read the terms, what more can you do?
Laura W
@Just Some Fuckhead: I thought the title was very funny and was just about to acknowledge John for the (D-MBNA Delaware) quip, which I especially enjoyed, and then I saw your post and pulled out in case what you said would make me look stupid for applauding John.
Now I’m just confused, so: Nice title, John! Funny stuff!
magisterludi
I’m thinking third party these days. I don’t know that the CW will hold much longer. 2010 could be a whole new world.
Thoughts?
Martin
I think you might be surprised.
Many of the people who were pushing for the CC deregulation – including inside the CC companies themselves have come out and said that this was not what they expected to happen. The dereg was pushed by many of the big players to lower rates, since there was a floor on how low CC rates could go, and the big banks wanted to go lower, have teaser rates, and so on. They got that, but they never thought anyone would go to 30% and find consumers stuck there.
Visa and MC will probably put some blind support behind this because they want to cut back on the credit market and push out the debit use since they make good money on debit cards and they have much lower risk there.
I don’t think there’s a whole lot of support for keeping things as they are, aside from the GOP who really only wants to oppose everything on earth.
KG
A fairly decent chunk of my practice involves litigating claims under the Truth in Lending Act. With the exception of the rescission provision for refinanced mortgage (15 USC 1635) it really is a toothless piece of consumer protection law. You get “actual damages” or statutory damages which are capped at either $1,000 or $2,000, depending on the type of the loan. Class action awards are capped at $500,000 (or 1% of the defendant’s value, whichever is less).
They should really start there. Do away with the caps on damages, change the class action awards to which ever is more $500,00 or 1% of the lender’s net worth, and you’ll see lenders get there shit together.
Mnemosyne
@Just Some Fuckhead:
Yep. Joe bent over for MBNA and they moved the jobs out of his state as soon as the bill was passed.
We’ll see if he learned his lesson.
jenniebee
If Dems don’t do this, Republicans will make the Dems failure their top issue in 2010 (Repubs won’t actually pass it either, but they’ll run on Democrats’ cozy relationship with Citi and BoA, with TARP as exhibit A and credit card reform as exhibit B). Fair and clear contracts on credit cards simply doesn’t have an arguable downside.
Just Some Fuckhead
@Laura W: As you know, I’m a ginormous fan of the blogger John Cole and I do also enjoy the occasional chuckle at the expense of our elected officials. However, I do not think it is fair to suggest our vice president is anything but loyal to the administration’s agenda until he actually does or says something disloyal. To manufacture a bogus quote and attempt to suggest something untoward by bringing up old Senate campaign associations that are no longer operative is scallawagish. And I say that not being entirely sure if scallawagish is a word.
HyperIon
message received.
but doesn’t that also mean that half the Democrats are superior to any Republican?
your “conversion” consists of going from “Dems suck” to “Repubs suck, but so do Dems”. yes, some Dems do suck. but not all of them.
Gump
The internal revenue code is hundreds of thousands of pages long, but it’s the credit card companies that need to reform their practices?
Laura W
@Just Some Fuckhead: I think you prolly weren’t breastfed enough.
HyperIon
@Martin:
Martin, that is the stupidest thing i have ever seen you write.
No one could have predicted, eh?
Who are these benevolent yet naive CC companies that were trying to look out for us?
John Cole
@Just Some Fuckhead: It is a bit early for the Corona, isn’t it?
Mnemosyne
@r€nato:
Do you always read the one that comes with your bill every month to see if they’ve made any changes? That’s one of the things you agreed to when you took the credit card: they can make any changes at any time to any of the terms and conditions, and the only notice they have to give you is that monthly notice with your bill. Your only recourse is to cancel the card (assuming they let you, of course — CapitalOne has become notorious for refusing to close cardholder’s accounts even after several requests).
The companies have been playing a lot — a lot! — of games recently. Apparently the current favorite is arbitrarily lowering people’s credit limit without prior notice. Fortunately, my husband had already paid his card off entirely so it didn’t really matter to him, but people who had balances above the new limit were suddenly hit with fees for being over their (new) credit limit.
Just Some Fuckhead
Omen, take a lesson. That right there is how you do comedy right.
robertdsc
This is something that many on the left need to get pounded into their skulls.
Just Some Fuckhead
@John Cole:
Do you mean the time of the day or the day of the week?
HyperIon
@TenguPhule: sorry, i did not see your terse statement of my basic point in comment #1.
Just Some Fuckhead
It doesn’t matter John Cole. I’m not drinking, just enjoying a rare bit of good mood thanks to a mutual friend. Going for a bike ride now with the dog.
kay
@Gump:
It’s fairly reprehensible, and it looks like collusion.
Here’s what they did. They withdrew credit that they had extended. In tandem. That made the available credit amount smaller. When that got smaller, the balance their “customers” were carrying became a larger part of the whole, bumping up rates.
I am touched and teary-eyed how business leaders in finance are taking the lead during this crisis. It’s inspiring.
They have offered not one solution, not one concession, not one bit of practical help when their customers are drowning. This is an amazing business model, and all Americans should emulate it.
The customer relations approach seems to be “screw you, sucker!”.
LanceThruster
Deleware banking abuses helped establish the mindset that fostered all the other banking abuses (IMHO).
“Let the financial corps write their own rules. What could possibly go wrong?”
koan0215
There is absolutely no way that anybody is going to reign in the banks on this. There is way too much money involved. I mean, I don’t even see congress or the white house pushing all that hard to regulate derivitive markets, let alone credit cards which are the banks’ bread and butter. And anyone who thinks that locking someone in on a revolving balance at 27.99% with a minimum payment based on 2.5% of the balance isn’t the point of issuing cards is whacked out. That there system generates a whole bunch of gold-plated toilets for the executive washroom.
Dennis-SGMM
Your dog can ride a bike?!
The Grand Panjandrum
@John Cole:
Nonsense. It is never too early to drink beer.
Roger Moore
@Brachiator:
Come on, that’s easy. The CC companies are just obeying the dictates of the market. They really want to make credit available to everyone, but that’s only viable if they can charge an interest rate that makes up for the risk of loaning to people with bad credit. If we put any limits on the CC companies business practices, they won’t be able to lend to all and sundry; only the rich and creditworthy will be able to have credit cards. And we all know how hard that would make life for the poor people cut off from credit.
LV-426
When did this ever happen? If it was anything but an accident I’m sure the cardholder was reimbursed.
WereBear
I have waded through my credit card terms. They could sum it up in just one line:
But I suspect that’s too much transparency for banks.
Laura W
@The Grand Panjandrum:
I’m just super grateful that 5pm EST is the official “Not Too Early To Drink Wine” time because if I had to wait till 7:00EST, I’d probably die!!
Chris Johnson
Hey, ‘only Nixon could go to China’. Maybe Biden is indeed on board for some serious change-fu. Unless he figures if he pisses off the banks he’ll NEVER be elected vice-president. OH WAIT…
Perry Como
Hey, we need a some sort of honeypot for the Chinese and Russian hackers. Wait, this was an actual plane? OH SHI-
TenguPhule
And you’d be wrong.
LV-426
@TenguPhule:
If they weren’t reimbursed then a crime was committed. Try again.
Leelee for Obama
@WereBear: Much like the management- favored version of an employee manual:
TenguPhule
Wrong. The practice is technically legal.
Martin
Well, my dad was CoB of his credit union when the law changed and he expected that rates from some lenders would go up, but figured that the top rates that we see now would simply be unsustainable. That is, he thought anyone suffering under that rate would be bankrupt before long, so why even attempt to put such a rate forward? Of course, lots of other creative lending practices (like HELOC churns) showed up soon after to make those rates possible for a lot longer than you’d expect, but at the time of the bill he thought they weren’t realistically possible. It was also thought that more players in the market would help keep rates from topping out, that there weren’t really that many borrowers so risky that you had to recover your outlay in 3 months, and certainly that there wouldn’t be so much free capital out there that anyone would really chase those customers. So the credit card problems stem from the same kinds of situations that led to the subprime mess.
But groups like my credit union supported the bill because they wanted to lower rates to attract borrowers, and they did, and they’re still below the floor before the bill passed, so personally, the deregulation was good for me. My dad was after the same thing for his credit union. I’m not willing to keep it that way because its way worse for so many people that my small benefit isn’t worth it, but there were a lot of players who used the legislation to make things marginally better.
arguingwithsignposts
@Martin:
That is, he thought anyone suffering under that rate would be bankrupt before long, so why even attempt to put such a rate forward?
There’s the problem right there, a credit union officer trying to figure out a commercial banker’s reasoning.
The credit card cos. raised credit card limits on people to keep them hooked and paying for the long term. At 9 percent interest, they were raking in the dough. Late payment, raise the rate to 19 percent. When someone has a huge balance, that becomes unsustainable pretty quickly.
My guess is that the cc cos. decided they could make back their principle and some pretty good interest before the borrower went totally broke. Or, as has been documented, the borrower would pay the minimum amount every month, and pay twice to three times the original balance over time.
But what they didn’t count on was the gas crisis this summer, and the housing crisis, which squeezed family budgets even further.
Now, they’re just squeezing whatever cash they can out of their remaining customers by jacking up fees on everyone, using the defaults caused by their own lax standards to justify their usury.
The Credit Unions thought “grow business,” the credit card cos and commercial bankers thought “indentured servitude.”
Now, even the 2005 bankruptcy reform isn’t stopping people from filing and flushing all that cc debt out of the system – bk filings are highest they’ve been since 2005 and rising.
I do hope Obama gets this done. The entire cc contract is slanted toward the company.
Martin
Well, I’d actually put a lot of small regional banks in the same category as the credit unions. Honestly, generally they don’t have the kinds of shareholder greed cycle that the big guys do, but yes, that in broad strokes is how the dereg played out.
But my point remains, there were a lot of players who supported the deregulation and didn’t fuck over the customer due to it. Unfortunately, the few players that did fuck over the customer were huge and did some real damage.
Just Some Fuckhead
I think yer swell Martin and I love my credit union.
Toreador Red
@LV-426:
Look at this.
mclaren
Forget credit card rates and bank fees. The big story in finance is the end of laws against usury.
For five thousand years, every civilization has recognized a limit to interest rates as the fundamental basis of a workable society. But back in 1981, under the glorious reign of the Gipper, America decided to do away with age-old laws against usury. (See the article in the April 2009 HARPERS magazine “Infinite debt: How unlimited interest rates destroyed the economy” By Thomas Geoghegan. Unfortunately the full text is not available online.)
We’ve seen the results of eliminating usury laws.
Why mobs are not demonstrating in the streets and burning down banks, and why Obama has not come out publicly in favor of reinstating laws against usury, I don’t understand. Laws against usury seem as basic as laws against slavery, or laws prohibiting feces in the food we eat.
Yet today, in the 21st century in America, it’s still legal to charge 391 percent (not “three point nine one percent,” that’s “three hundred and ninety one percent”) interest on payday loans, and no one utters a peep about it.
bjacques
@32: Someone will have to ask the CCs whether good debtors should subsidize the costs of all the dogs, cats, children and readers of spam that the CCs offered credit to.
Anyway, if I have a credit card, why should I give a good goddam about the companys other customers? They’ve got nothing to do with me. This isn’t pool insurance.
Evinfuilt
I like to think my Grandfather was born in the wrong decade. Working illegally as a loan shark in Glasgow he made a lot less in interest than Pay-day loans and other legal money rapes in America.