Will Obama Usher In Credit Card Reform?

[tylerdee]

So this website is reporting that consumer advocates, credit counselors, elected officials and financial planners are preparing for a new era of consumer protection from banking and credit card industry practices now that Obama has been elected President. (feels good to say!)

Now I know that Obama said "The economy should take first priority", and he has even created a pro-consumer platform about predatory lending, but my question is: Can Obama and his administration effectively tackle this issue in a reasonable amount of time where most of America will see it as a step towards accomplishment, or will this situation take longer than his term allows?

Personally, I think any step in the right direction towards consumer protection should be seen as ground-breaking.

[Stellabella]

1. Do it now while we hold the legislature.

And put an end to usury.

[leftofthedial]

2. I don't know.

What's the DLC position on credit card reform?

Didn't they support the consumer-screwing bankruptcy act? Aren't they free-market anti-regulators?

With the appointment of Emmanuel, the DLC clearly will be running things.

[TomInTib]

3. Now, THAT is when a tie in the Senate would be interesting.

I wonder what Biden would do.

[Horse with no Name]

Well now that Biden isn't beholden to his Delaware constituents ONLY

but beholden to all of the citizens of this country...it is possible, isn't it?

[Horse with no Name]

4. removed

posted in wrong spot.

[Donnachaidh]

5. roll them back to pre-usurious single digit rates.

And any bank that refuses to do so -- take them to court under the RICO act. How ANYONE can say with a straight face that banks aren't acting like gansters with these rate hikes, is beyond me.

[tylerdee]

7. good point.

[pitohui]

6. there needs to be some action in congress on this

this is not something to be done by executive demand alone, i believe it would require congressional consent

in my humble opinion there needs to be a return to strict limits on the fees that can be charged and there needs to be a return to usury laws (a control on the amount of interest that can be charged)

the country worked perfectly well with usury laws up until reagan and his henchmen got rid of them and allowed the public to be gouged for insane interest rates that a loan shark would blush to charge

with current legitimate interest rates so low -- buy a CD and you will see what i mean, or buy a savings bond and see what rate you get -- there is no reason why anyone should be able to legally charge a double digit interest rate

[TwixVoy]

8. Credit card reform is simple

People need to be limited to ONLY what they can afford to pay back - and only afford to pay back within a resonable time.

When we have people allowed to make purchases that they can spend the next 20 years repaying - and simply NOT being able to pay off before then - we have a problem.

For one thing credit card reform needs to include income verification. Typically only credit unions bother to verify employment and income before giving out a credit card. No one should be given a credit limit higher than that persons income can handle.

Banks also need to be limited to looking at credit reports and seeing what other obligations a person has. If a person has verified income of 25K/year and already has 50K in debt it should be illegal to offer them a credit card, for example.

Basically credit card reform needs to mostly consists of legislation making it illegal to offer a person more credit cards/limits than their income can support.

Then of course you have situations where people can't pay, such as medical issues. There needs to be reform so that these people have time to get back on their feet before the interest rate goes through the roof and tons of fees start getting charged.

[pitohui]

10. so your idea of "reform" is to protect the bank rather than the individual?

those are very odd reforms

in my humble opinion, reform would take a different path

if someone wants to make a loan w.out doing a credit check, w.out verifying income, or w/out seeing what other outstanding loans the borrower might have -- FINE -- the bank or credit card co. is a big boy, they can loan as much $$$ to that person as they might wish

however, here's where the reform comes in -- they cannot charge any more than a certain amt of fees, no matter how late the payment comes in -- there should be a cap on what any given loan should be able to earn, instead of snowballing interest rates and fees -- further, there should be strong usury laws, such that interest rates above the amount considered usury (in the past 18 percent annual which is probably too high itself in the current environment) should never be charged

there should also be availability of reasonably priced bankruptcy to people who can't meet their obligations -- even if the reason for the bankruptcy is a reason "you" consider bad such as trying to start one's own business or getting involved in a messy divorce -- as opposed to reason for the bankruptcy being something we all consider legitimate, the medical expenses -- bankruptcy needs to always be there as an option of last resort

in that world, there would be no need for your reforms, because the smart lenders would wake up and do the income verifications, credit checks, etc. on their own, without any need for new legislation

but it all starts with this very simple step -- anti-usury laws that prohibit excessive interest rates and fees, the same anti-usury laws we had in place until the reagan era

no should be charged usurious fees, even if once they did buy their kids a teevee set for xmas

just my humble opinion but there it is

if a bank wants to take a risk on a loan to someone "you" think already has too much debt, well, good for that person for getting that loan, it might be the final loan they need to put their new business over the top or the final loan they need to keep going while getting chemo -- and if they can't pay back the loan, well, the bank knew it was taking a risk and that the return on investment was NOT guaranteed

when i make a risky investment there is no guarantee but when a bank takes a risk there is no risk because they can adjust the odds so that they always "win?" nope, don't think so

you are a private person can loan all you like to whoever you like -- and if the person can't pay, well, you don't get to bitch to the federal gov't to have the taxpayer replace the money you loaned foolishly

it should work the same for a lending institution

fees and interest rates should be capped for EVERYONE, under the anti-usury laws, instead of picking and choosing who will be "deserving" and who isn't, the sick person w. medical bills doesn't actually need something else on her "to do" list, proving herself deserving to a skeptical court before her excessive fees/interest rates are knocked down...

[tylerdee]

13. I agree about the fees and interest rates should be capped for everyone

[Txsingledad]

11. People need to be limited to ONLY what they can afford to pay back?

Sorry for disagreeing in my first post, but nowhere have you mentioned anything about personal responsibility. You as the consumer should know better than any bank or finance company what you can afford and what you cannot.

I agree on the points of verifying income and some other things, but if the consumer lies then all bets and protections are off.

Back to lurking.

[HiFructosePronSyrup]

12. The pound of flesh which which I demand of him is deerly bought

tis mine, and I well have it.

Well, thanks for the opinion from the 12th century.

[Stuart G]

9. Yes....no doubt...nt.