(AP Photo/Mark Lennihan, File)
President Barack Obama’s ambitious economic recovery agenda is decidedly short in a crucial area:
Consumers on the brink of losing their homes have heard plenty of sympathy, but they have received no real relief — at least on a scale that would help rescue the hundreds of thousands of homeowners slipping toward foreclosure.
But the president promises swift action to rein in credit card companies run amok. The action cannot come too quickly and new restrictions cannot be too tough on this unrepentant sector of the financial services industry.
Last month, the Senate voted down legislation that offered the only realistic tool to reverse the nation’s tidal wave of foreclosures: granting bankruptcy courts power to reduce — or “cram down” — home mortgage debt.
The mortgage lending industry has proven decisively that it has no interest in helping to clean up the huge mess it helped create. It has refused the across-the-board loan modifications needed to bring immediate relief to homeowners. And it has the upper hand because of a special exemption under the bankruptcy code that strips judges of power to reduce mortgage loans.
The Senate had the chance to put a hammer in judges’ hands, but it refused. As Sen. Dick Durbin, D-Illinois, put it, the banks “own the place.”
But the reality, too, is that Mr. Obama did not push hard — a disappointment sure to doom countless homeowners to foreclosures that might have been prevented had the legislation passed.
Mr. Obama pledges to do better with credit card abuse — another “financial service” that’s been extended recklessly and administered unscrupulously. The result has been a brutal strain on American families, including personal bankruptcies leading to losses at credit card companies that may amount to more than $80 billion by 2010, according to federal regulators, further stressing the banking sector.
How have the major credit card companies reacted? By jacking up fees and interest rates on an ever larger pool of credit card customers — some by as much as 10 percent — including on consumers who never have missed or had a late a payment. The credit card companies know reform is at hand and want to soak customers to the greatest extent possible before the party ends.
Mr. Obama called credit card executives to the White House to push them to reform their practices. He devoted a recent weekly radio address to the topic — urging Congress to make legislation a top priority so that he will have bill to sign by Memorial Day.
Legislation already has passed in the House that, among other things, would limit credit card companies’ power to arbitrarily raise rates, require that they give customers 45 days warning before raising interest or fees, extend grace periods for payments and protect college students and teens from predatory industry marketing practices.
The Senate promises an even tougher approach, such as stricter controls on rate increases and putting the kibosh on “double cycle” billing practices that permit companies to charge extra interest on balances that have been paid on time.
Mr. Obama has yet to prove his consumer protection credentials. Credit card reform would be a start. The sooner and tougher, the better.
John Deal and Amazedbythelunacy,
You children just want to argue? Or maybe I did not make myself clear that I was spesking of us the consumer when I made these comments:
“It boils down to GREED again and these merchants and banks are all partially responsible but in the end we are the ones who must look out for our own best interests because there will always be people and businesses out there who are wanting your money even at their own detriment and the detriment of this country.”
Note: Notice I stated businesses and banks are PARTIALLY RESPONSIBLE? And that we (consumer) must look of for our own best interests?
“It is purely a sort of temporary insanity and permenantly for some/ (lol). Many of us have been there. But, it is never too late to change these insane habits, addictions and crutches that many of us have developed or just plain can’t afford today”.
Note: The above committ was made speaking about consumers.
Now, do you see how WRONG you two are? You minds are just tainted and that is what you wanted to think that I believe.
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Always someone else’s fault right D. Walker?
If it isn’t the evil oil companies, it’s the evil banks. If it isn’t the evil banks, it’s the evil insurance companies. Or maybe the credit card companies. Or maybe the evil retailers. Always, Always someone else’s fault.
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Walker,
How is the greed of the CC company any different from the greed of the consumer who cannot afford what they want? And why should one be treated differently from the other?
I say let the CC company and the consumer have each other. They deserve each other.
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It use to be when you were in any retail outlet and could not afford the merchandise at that time, it was suggested by the clerk to place it in “will call” then later the term changed to “layaway”. As late back as 2003 you could still find “layaways” in many retail outlets but since the end of 2003 ALL layaways disappeared and now everyone of these retail outlets are pushing their credit cards down your throat to place your purchase on. It is ridiculous and this place was a lot better off before these practices.
It boils down to GREED again and these merchants and banks are all partially responsible but in the end we are the ones who must look out for our own best interests because there will always be people and businesses out there who are wanting your money even at their own detriment and the detriment of this country. It is purely a sort of temporary insanity and permenantly for some/ (lol). Many of us have been there. But, it is never too late to change these insane habits, addictions and crutches that many of us have developed or just plain can’t afford today.
The credit card companies are abusive and just plain outright immoral in there behavior and under any decent and ethical government, these practices would be illegal but our lawmakers have always fixed it so that the banks (credit card companies) could behave in unethical and harmful ways towards the consumer.
I am happy to see this changing now but most of these monster politicians who have been in office over 6 years are just plain untrustworthy hypocrites who are responsible for allowing these harmful and unethical practices and it has nothing to do with political association, they are ALL guilty. It should have been criminal all the misleading marketing practices that credit cards company have been infamous for in order to convince a consumer to transfer credit card balances from their other credit cards to theirs at much cheaper rate only to jack it up at ridiculous APR’s a short time later by deceit.
And lets not forget all the mailings and telephone calls that credit card companies were infamous for before their meltdown. Remember all those mailings that your child use to receive while in college guaranteeing them ridiculous credit lines of $5,0000.00, just to suck these children in? But when they inquire, it is really more like $500.00 but within a short period of time as short as a year; it can easily reach a $5,000.00 limit.
The banks are the sleaziest businesses around. But they have been well protected by our lawmakers in Washington and in every State, what hypocrites these career politicians are who have been in Congress for over 6 years. ppp
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I agree with most of the comments. People “borrow” money to buy things they cannot aford and we’re supposed to go after the CC companies because they granted the desired credit? Same applies concerning homeowners. The homeowner borrows money at terms he cannot afford and we’re to be upset with mortgage comapnies? I realize there have been abuses in both industries but blame must be squarely placed on the consumers as well.
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Amazedbythelunacy – you laugh [sort of, I presume], but yes indeed, this is the state of our culture. Many people out there just can’t connect the dots in their mind. I wonder if other fallen empires of the past went through this extreme-dumb stage too.
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Who the hell writes these things?
They need to apply for Robert Gibbs’ job.
Let me get this straight….A bankruptcy judge should be able to lower the principal owed on a house and the tool that can’t pay gets to keep the house? That ought to stimulate the credit markets and really get people to lend money to prospective homebuyers.
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> The mortgage lending industry …. has refused the across-the-board
> loan modifications needed to bring immediate relief to homeowners.
When home prices went up, should mortgage companies have been able to “write up” the principal on the loan so that they’d reap the capital gain? Of course not, and homeowners reaped tremendous rewards over the past decade. Now that things have briefly moved in the other direction, what makes you think the mortgage industry should absorb the loss?
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When I was working my way through high school and college, one of my jobs was as a clerk in a large retail chain. Charge cards were very difficult to get. I used to admire customers who had charge cards because I knew they had to have very good incomes and credit to get a revolving charge card. It was extremely rare that a purchase was declined, because this company was very circumspect in issuing cards. Somewhere along the line, banks figured the arbitrage between issuing cards to anyone and soaking them with these usuious fees was more profitable. Whose fault is it? Probably both the banks and the consumers who let the need for instant gratification override their good financial sense. Customers would be better off not using credit cards for things they can’t afford. Banks would have much more predictable earnings if they didn’t have to wonder how many deadbeats were not going to pay. I liked the old model better.
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After continually boxing in c/c companies and their abilities to generate profits through conventional means, we’re appalled that they resort to unconventional means. You can choke off their tools, but you’ll end up killing them and your own ability to get / hold onto a c/c. And you’ll end up [re]bailing them out too. If we want a return to a rational world – at some point in the future – we’d better stop piling on (and turning back) all of the controls. Where all of these controls end up is not a pretty place.
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“Mr. Obama pledges to do better with credit card abuse — another “financial service” that’s been extended recklessly and administered unscrupulously. The result has been a brutal strain on American families, including personal bankruptcies leading to losses at credit card companies that may amount to more than $80 billion by 2010, according to federal regulators, further stressing the banking sector.”
The only “abuse” going on is by the American consumer. Ever heard of living within your budget? Credit card companies are in business to MAKE MONEY. Just like everyone else would do if they had the business. Consumers are not forced into using a credit card. How about using cash? The average consumer is TOO STUPID to figure that out however.
Wake up people. Congress, and the President, want you in debt. It’s easier to run your life that way.
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