Friday, March 11, 2005

Crushing the consumer (with debt)

I have been following the dialogue pertaining to the bankruptcy bill with interest. One is apt to track legislation that will either currently, or in the future, affect one's person.

There is no denying that Americans are carrying dangerous levels of debt, particularly unsecured debt incurred from those little rectangular cards deemed "credit" cards. For many self-employed and small business people, as well as families trying to keep themselves afloat amidst job losses, spiraling medical costs, and the systematic eradication of the middle class, credit cards allow many to rob Peter, to prolongue paying Paul.

As Arianna Huffington penned in her weekly syndicated column, this new bankruptcy legislation is "so hostile to ordinary American families that it could only have come about in a place as corrupt, cynical and unmoored from reality as Washington, D.C."

She goes on to write, "Instead of cracking down on predatory lending practices, closing loopholes that favor the wealthy, and strengthening the safety net for working people, single mothers and elderly Americans struggling to recover from a financial setback, the Senate put together a nasty little bill that reads like a credit industry wish list.....So what does the bill do? It makes it harder for average people to file for bankruptcy protection; it makes it easier for landlords to evict a bankrupt tenant; it endangers child support payments by giving a wider array of creditors a shot at post-bankruptcy income; it allows millionaires to shield an unlimited amount of value in homes and asset protection trusts; it makes it more difficult for small businesses to reorganize, while opening new loopholes for the Enrons of the world; it allows creditors to provide misleading information; and it does nothing to rein in lending abuses that frequently turn manageable debt into unmanageable crises. Even in failure, ordinary Americans do not get a level playing field."

For many Americans, the downward spiral of credit card debt comes from the availability of easy credit, which is offered daily through mailings, phone solicitations and other promotions, which is the equivalent to offering a life-preserver to a drowning person, or heroin to a junkie. These modern day money-changers charge interest rates that most kindly could be termed "usury". [For the hell of it, the next time your credit card company jacks up your APR, call them like I did and accuse them of usury and see the indignant response you get from some lower-level flunky, feigning moral indignation at your charge!] Offering credit cards at interst rates as low as six or seven percent and luring you into a level of debt of thousands and then jacking up your APR to rates between 20 and 30 percent!! This is criminal, but instead of the Congress going after the credit card companies, they've turned the tables on you and I.

The audacity of this legislation defines rational commentary, because it so blatently attacks the very people who are being so egregiously "fucked" by the system. Then, after this system takes their job, dumps medical costs on them no longer covered by health care benefits, not to mention those in the northeast who may have been forced to open new lines of credit to put oil in their tanks so their children wouldn't freeze, turns around and practically tosses them into debtors prison.

Read Huffington's piece, because I can't add much to what she highlights as being so grossly unfair about this legislation.

When Huffington posted her commentary, the bill was pending; since then, it has passed, by a wide margin, 74-25, with not one Republican voting against it!

If you are a member of the working-class, the one means of giving yourself some space has been taken away. With this new law, credit card companies and financial institutions can now use the long arm of the law to place the noose over your neck and tighten it until you can't breath. All in the name of the Bush administration's business-friendly agenda. [Most of your credit card companies who lobbied aggressively for this legislation, including MBNA, were large contributors to President Bush's re-election]


Richard S. said...

Thank you for this informative post on the issue. (If I had seen it sooner, I would have referred to it in my own post at Commie Curmudgeon/No More Big Wheels, which I wrote this afternoon.) This legislation should be generating a lot of condemnation and outrage, but I've seen relatively little in the way of comment on it so far.

Regarding the role of MBNA, people should also keep in mind that Working Assets sold their credit card to MBNA years ago, and Working Assets cardholders (myself included) are subject to the atrocious policies of MBNA, including astronomical interest rate increases for anyone who takes a while to pay back debt -- even if you're meeting the monthly minimum payments. Of course, through this business relationship, Working Assets cardholders have also indirectly given a great deal to both Bush campaigns.

Apparently, there is no such thing as a "progressive" credit card. The business itself is designed for reverse-Robin-Hood robbery, with no ethics attached. And the fact that our federal government is so eager to support all these criminals tells us something (which most of us already know) about the government as well.

Jim said...


Great post. Working Assets was my business credit card, due to their supposed support of "progressive" causes. Was I in for a rude awakening when I got my statement 2 mos. ago and saw my APR was jacked to 19.9 percent!! Needless to say it sent me through the roof, necessitating phone calls and other means to get out from under a rate that is robbery at best.

While I'm fortunate to have a bit of equity in my home to tap for refinancing, many poor and folks working hard and desperately trying to keep their heads above water, do not.

As I've written and to which you allude to in your post, most of us in this country are in trouble, particularly when no one seems to care enough to reign in unfettered capitalism, with an eye only towards maximizing profit--all at the expense of most of us who aren't part of the plutocratic minority running the show.

Richard S. said...

19.9 percent is pretty standard. Working Assets once jacked my interest up to 28 percent, because I was late with a payment. Two times recently, they brought it up to about 25 percent (even though I haven't been late with a payment in years), and I had to argue them down to somewhere between 18 and 20 percent (it varies, depending on if it's a purchase, cash advance, etc.). They've also double charged me for cash advances a couple of times, and there have been other problems.