Credit card companies continue rip-off of consumers - Obama to Congress: Send Me the Credit Card Reform Bill
President Obama today called on Congress to pass a credit card reform bill so he can sign it into law by Memorial Day. “The abuses in our credit card industry have only multiplied in the midst of this recession, when Americans can least afford to bear an extra burden,” President Obama said in his weekly address. “It is past time for rules that are fair and transparent. That is why I have called for a set of new principles to reform our credit card industry. Instead of an ‘anything goes’ approach, we need strong and reliable protections for consumers.” The president highlighted abuses in the credit card industry -- including Americans getting ripped off by sudden rate hikes, unfair penalties, hidden fees and fine print that all too often hides the truth.
With Defaults Rising, Is a Credit-Card Crisis Looming? - by Kristina Dell
We're not nearly out from under the subprime mortgage meltdown and already analysts are speculating about the next industry crisis, related to the little plastic cards in your wallet. With American Express becoming a bank-holding company this week in order to get low-cost funds and share in the $700 billion bailout pool, it's clear that even traditionally resilient industries like credit cards are feeling pressured. "Credit cards are in line to fall," says Adam Levitin, associate law professor at Georgetown University. "The question is whether they will beat out the auto industry — they're racing for the honors." Meanwhile, home equity, the biggest source of wealth for most families, has been drained by the mortgage crisis. "There isn't a cushion for anyone who has a bump in the road," says Levitin. "Credit cards are often the first place where we start to see all the other problems show up, from medical bills to divorce to a death in the family." And then, of course, there's unemployment. Thus, it's not surprising that credit defaults are up dramatically, at the highest rate in six years.
US Economy: Greedy credit card companies and Congress created a financial disaster - by Yael T. Abouhalkah
It's a fascinating story: Greedy credit-card companies convinced a complicit Congress to approve new 2005 bankruptcy rules that helped torpedo the U.S. economy. The report making these allegations rings true; it was prepared by researchers at the Federal Reserve Bank of New York. It's yet another case where a self-serving industry got its way with Congress, with dire consequences for ordinary Americans. As for Congress, it's another case where members (who now want a $4,700-a-year raise) made irresponsible decisions to placate big-time donors. Basically, the new bankruptcy rules promoted by the credit card industry have led to a surge in home foreclosures. The reason: Before the 2005 bankruptcy act, people could file for Chapter 7 bankruptcy, which erased unsecured debt such as credit card debt. Chapter 7 helped people keep some money to make their mortgage payments. But the new law has forced more people to file for Chapter 13 bankruptcy. They still have to make payments to lenders such as the credit card companies, reducing the amount of funds available to make mortgage payments.
Krugman Proves Keynesianism Isn't Dead After All - by William Pesek
Krugman, 55, didn't get the Nobel for his work on Japan's lost decade, but for ``analysis of trade patterns and locations of economic activity.'' The Princeton University professor and New York Times columnist is among President George W. Bush's most prominent critics. Coming less than a month before an election, the award left some economists wondering if the Nobel committee was playing politics. Krugman's work is getting considerable attention in Asia, and for good reason. His reputation in this region was made in the mid-1990s when he was among the most consistent predictors of the 1997 Asian crisis. A couple of years later, Krugman correctly opined that Asia would stage an impressive comeback. Far from it. At the rate the U.S. is socializing its financial system, it seems only a matter of time before airlines, automakers and major retailers find their way onto the government's balance sheet. It would be the ultimate irony if the U.S. had to bail out Wal-Mart Stores Inc. with borrowed Chinese money so that it can support all those Chinese factory workers. Globalization is bringing the world full circle -- from state-owned companies to privatization to the re-nationalization of those enterprises. It's no wonder Venezuelan President Hugo Chavez is referring to the U.S. leader as ``Comrade Bush'' and saying ``now Bush is to the left of even me.''
Note EU-Digest: What could probably immediately stimulate the US economy is for the Government to advice those banks which received bailout money to earmark some of that liquidity to provide credit card holders in the US a one year moratorium on their credit card payments. Total US consumer debt (which includes installment debt, but not mortgage debt) reached $2.46 Trillion in June 2007, up from $2.398 Trillion at the end of 2006 (Source: Federal Reserve). Total US consumer revolving debt reached $904 Billion in June 2007, up from $879 billion at the end of 2006 (Source: Federal Reserve) The median U.S. household income is currently $43,200 and the typical family's credit card balance is now almost 5 percent of their annual income. (Source: Federal Reserve) Of the households that do owe money on credit cards, the median balance was $2,200 -- meaning half owe more, half less. (Source: MSN Money)National credit card debt in the US per credit card borrower increased 8.6 percent to $1,717 in the second quarter of 2008, compared to the same period 2007, according to a study by TransUnion.
US elections - Obama scolds credit card companies, McCain - by Johanna Neuman
Democratic presidential candidate Sen. Barack Obama took aim today at credit card companies that charge exorbitant -- and sometimes hidden -- fees to economically scrapped consumers, saying the companies "have been crossing the line to boost their bottom line." Charging that his Republican opponent, Sen. John McCain, "has been part of the problem" by opposing legislation to protect consumers from deceptive practices, Obama said: "We cannot let the rules of the game continue to be rigged against ordinary Americans."
Obama noted that credit card companies have spent millions of dollars to finance political campaigns -- including one industry group that spent nearly $800,000 on lobbying -- "to get laws written to their liking." He vowed that as president, he would "look out for the interests of hard-working families, not just their big campaign donors and corporate allies." Obama, saying he wants to ensure that credit card debt doesn't become "the next sub prime crisis," proposed a five-star rating system of companies. While urging Americans to "pay what we owe," he said he would push for a credit card bill of rights to ban interest on late fees and unilateral changes to card agreements so consumers "pay the rate you signed up for."
