Credit Card Industry Aims to Profit From Sterling Payers

The feeding frenzy is beginning as a recession causes the U.S. Government, for the first time in years to protect Main Street American interests from the unending greed of creditors and Corporate America. It is because finally the Congress and the current administration are actually trying to help consumers. Now they have decided if I cannot have one, then I will take the other.


In their desperation the Credit Card Industry is turning on their once favored child; the cardholders who paid their bills on time. In addition, the Banks are blaming the favored child and others for the problems they helped cause in the first place. I did not use to be this way, as reported by Andrew Martin, in the New York Times:


“Banks used to give credit cards only to the best consumers and charge them a flat interest rate of about 20 percent and an annual fee. But with the relaxing of usury laws in some states, and the ready availability of credit scores in the late 1980s, banks began offering cards with a variety of different interest rates and fees, tying the pricing to the credit risk of the cardholder.

That helped push interest rates down for many consumers, but they soared for riskier cardholders, who became a significant source of revenue for the industry. The recent economic downturn challenged that formula, and banks started dumping the riskiest customers and lowering their credit limits in earnest as the recession accelerated. Now, consumers who pay their bills off every month are issuing a rising chorus of complaints about shortened grace periods, new hidden fees and higher interest rates.”


No one told you to rely on a business model built on the greedy practices of “ high penalties” “annual fees” and “interest rate hikes” ---you gave people to had dodgy credit and bet on them failing. I mean the industry cannot even feign ignorance, because of the readily available credit reports (DO NOT GET ME STARTED ON THOSE).

Now you are going to punish the good child, who did what you asked and beat them mercilessly with annual fees and penalties, while tell them it’s their fault you had to beat them…..I know that is a harsh criticism but it is a true one. Ok, here is a better one, its loan sharking in a sense; because you are hoping, the person will fail so you can get even more money and chain the person to you forever by paying outrageous interest.


However, this is only the beginning of what I foresee as a huge challenge for the Obama administration. Credit Company’s are culling the herd of risky cardholders they are raising the interests rates, and the Senate handed them a huge victory by not capping interest rates, so banks can continue to lift them, albeit at a slower pace and with greater disclosure.


Hmm, I think I will call that one a draw. Banks are already capitalizing on the opening though as they are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups” …


In my book, such actions will only shrink revenue from existing cardholders, so the argument that that increased regulation will cause Banks to issue few credit cards at a greater cost to current cardholders is bunk. Do not believe the BS, this is a $20 billion industry so I doubt it will just go away. Money is green and they will find a way to get it. The cards will flow.

What gets me is that credit card companies appear to be showing the flawed rationality of career felons or carjackers , in my view, and on that note I will end with the following statement in the New York Times,


Austan Goolsbee, an economic adviser to President Obama said that while the credit card industry had the right to make a reasonable profit as long as its contracts were in plain language and rule-breakers were held accountable, its current practices were akin to “a series of carjackings.”

“The card industry is giving the argument that if you didn’t want to be carjacked, why weren’t you locking your doors or taking a different road?” Mr. Goolsbee said.

Picture of the Day

I was on Jack and Jill Politics today, and saw the picture next to the morning thread with the following caption:

President Barack Obama bends over so the son of a White House staff member can pat his head during a family visit to the Oval Office May 8, 2009. The youngster wanted to see if the President’s haircut felt like his own.
(Official White House Photo by Pete Souza)


I smiled as I read the caption, while thoughts of my niece O, and my nephew, D, filled my head and smiled even wider because they can grow up in a world where the President is just like the two of them. Young, Black, Intelligent, and Strong


You know folks, after living in the Deep South for most of my life, I find myself still in awe when I see pictures like this one. I remember growing up in my classrooms and getting asked the question of "what do you want to be when you grow up?" and the ridicule if you said "I want to be president someday." But who is laughing now !!!


Ok, I had my moment lol.

"Senator Boxer: Nominate a Woman!!!-Making the Band (Part 2): A New Supreme

Wow, Senator Boxer another litmus test right out of the cultural wars, just brilliant.

You know what I can't take it anymore, all the litmus tests for being a Justice on the Supreme Court. If its not how many left or right leaning decisions in the ceaseless cultural war, now its gender. I agree there are not enough women judges on the bench, and add in the additional criteria of race and there are not enough minority (women & men) on the courts. The need for a person of color is as great as the need for a woman, as a matter of fact I believe 2 people of color , and 2 women so its a tie.

That is why I agree with Senator Boxer, we do need a Supreme Court that is more representative of all Americans, so that its decisions had better reflect the diversity of life experiences and points-of-view in America. Where I disagree is creating a gender or racial litmus test. Whoever is the President chooses, I am sure it will be based on not only gender or ethnicity, but merit, the legal reasoning s/he demonstrated in decisions, the President's legal philosophy for American law in the 21st century, and the nominee's expertise in a specific areas of law that the Court is lacking.

Such a decision does not preclude a woman, or minority, both of which are sorely needed on the Court with the Federalist 5. I will also stress I would love to see a woman that is a person of color. However, it will neutralize the blistering cultural wars, and yes sexist rhetoric ( Mr. Rosen this means you—temperament—please) and focus on a need of the Court to deal with future issues on the horizon.

I have blogged about this in “Making the Band” Part 1, about the punditry and political jockeying and the essential question in my book is the same: What area of expertise is needed on the Court in light of the current economic crisis and 21st century issue? Race, gender, etc are moot point Democrats won folks.

Nevertheless, please exercise your right to be heard and your opinion stated, by participating in the process and lobby for whomever you think is the best candidate. Women’s groups should and must lobby for women’s issues and women’s candidates, just as People of Color ( Asians, African-Americans, Latino-Americans, etc) must lobby to for issues and candidates, etc… ad infinitum that affect them. Free Speech is essential to democracy, so go ahead and write letters and emails, but think about what I said as well.

What area of expertise is needed on the Court in light of the current economic crisis and 21st century issue?