Congratulations Congress. Credit card companies would be able to charge rates and conduct business in a way that would make Vinnie-The-Loan-Shark blush.
I remember writing that phrase in a piece for The Democracy Cell Project asking folks to call their Congressmembers and push them to vote against the Bankruptcy bill.
My Congressman, John Sweeney, voted for it. He has since been replaced by a Democrat, but I still have concerns about whether Congressowman Gillibrand, a member of the blue dogs, would have voted against this measure had she had the opportunity to vote against it. That's why it's still important that we talk about this issue with our family, friends, neighbors, and if you are like me, everyone you run into at the grocery store, car wash, movie line, well, you get the idea...
But, here's a question--how do you talk to people about what the credit card companies are doing without getting into the eyerolling minutiae of it.
Here's what I have come up with:
When Congress first allowed credit card companies to charges rates that would make Vinnie-the-loan-Shark blush, it was with a certain understanding, and that understanding was this: When banks lend you money on a mortgage for your house, they have an asset to sell, should you not be able to pay your mortgage. They could sell your house and get thier money bank. Okay, that seems fair. And then they charge an interest rate on top the mortgage, (while still having the house to secure the loan), because it's fair that they should make a profit for lending you the money--after all, you get a nice house out of the deal. Still, all seems fair.
So what's different with the credit card companies?
Well, they don't have an asset to sell when you don't pay your credit card. It's called an "unsecured" loan. If you don't pay your credit card, under the old bankruptcy laws, you could still keep your house, your car, and some other assets, so you weren't wiped out and could still hols a job and keep a roof over your children's head and food on the table.
The deal was this: for the risk that the credit card companies were taking for lending you money without you putting up an asset, they were allowed to charge an exhorbitant interest rate. Okay, mostly fair, since they are bearing the brunt of that gamble. But all that changed with the change to the bankruptcy laws. NOW the credit card companies have "secured" loans. So why should they be able to charge these knee breaking mafia type rates? Remember, when this bill was passed, the interest rates were supposed to immediately drop...I'm still waiting for that day.
Now, to the surprise of absolutely no one with two working brain cells to rub together, Congress has to hold hearings to investigate the abuses by credit card companies.
So what should be done? This is one of the more simple qustions to answer.
It seems to me, that since the credit card companies haven't done thier part and lowered interest rates, the bankruptcy laws should go back to the way they were. Those laws, despite Republican claims to the contrary, were working just fine. We there some cases of abuse? Probably. But which would you prefer--some isolated and prosecutable cases of individual abuse, or some legal and Congressionally santioned cases of institutional loan sharking?
There are now 16 million living at the deepest level of poverty in America. A scary percentage of that number are children. Children In America in 2007 are living in deep poverty. Do we really think it's right that children should be out on the street because someone couldn't pay the scandolous credit card rates that Senator Biden (D-MBNA) and 23 Congressional Democrats from the last Congress think are just fine and dandy? No, it's not right.
So I would ask that everyone who reads this commit to talk to one person in the next day and educate them about this issue. Because it's coming to a billing statement near them. And it's coming soon, if it's not there already.
"The rich get richer and the poor get poorer."
That used to be a paraphrased line from a richly ironic Gus Kahn song, "Ain't We Got Fun". Now, it's the sad legacy of political greed from Republican rule and Democratic enabling that we must reverse.
The children living in poverty, and the families that will be driven into poverty by these lending practices deserve better from their representatives in Congress.