NYC: Resolution Introduced to Divest the City from Usurious Banks

[SOS]

Resolution 1812, introduced by CM Lappin on February 11, 2008:

"Resolved, That the Council of the City of New York calls upon the City of New York to divest its assets from financial institutions that evade New York State’s usury law."

Full text of resolution:
http://webdocs.nyccouncil.info/textfiles/Res%201812-2009.htm?CFID=30514&CFTOKEN=78968917

If you live in NYC, please contact your Council member to support Res. 1812.
Find your member here:
http://council.nyc.gov/html/members/members.shtml

If you don't live in NYC, contact your local legislative body representative (town council, city council, state legislature) to introduce similar legislation.

This idea, if passed into law, will undercut the Marquette Supreme Court decision and will return usury law to locally accepted levels.

[G_j]

1. K&R

[SOS]

2. The full text is really good....

Here is the full text.
This could save people paying 29% on their credit cards a lot of money!

Res. No. 1812

Resolution calling upon the City of New York to divest its assets from financial institutions that evade New York State’s usury law.

By Council Member Lappin

Whereas, The root of our nation’s current financial crisis resides in the credit market, an industry with minimal federal oversight and regulation; and

Whereas, Each of the 50 states has the authority to regulate usury within its borders, granting each state the discretion to cap the amount of interest charged by a lender at a certain rate; and

Whereas, The maximum allowable interest rate in New York State is capped at 16%; and

Whereas, Enormous discrepancies in allowable interest rates exist from state to state, such as the stark difference between New York and New Jersey: lenders based in New Jersey are legally allowed to charge borrowers nearly twice as much in interest as lenders based in New York; and

Whereas, These inconsistencies on a national scale incentivize organizations such as banks and credit card companies to evade New York State’s usury laws by relocating to states whose laws allow lenders to charge interest rates higher than what New York law permits; and

Whereas, As a result of the 1978 U.S. Supreme Court ruling in Marquette v. First Omaha Service Corp., lenders that affix the word “national” to their name are allowed to export their home state’s high interest rate to borrowers in New York and other states; and

Whereas, A lack of federal regulation has created a hostile environment for subprime, or low-income borrowers, who can easily fall victim to deceptive and predatory lending agreements that increase the chance of defaulting on a mortgage and ultimately losing a home or property through foreclosure and repossession; and

Whereas, Predatory lending tactics not only harm individual New Yorkers, but also harm the entire city, for an increase in the foreclosure rate triggers a decline in property value for entire neighborhoods; now, therefore, be it

Resolved, That the Council of the City of New York calls upon the City of New York to divest its assets from financial institutions that evade New York State’s usury law.

[Azooz]

3. NYC kicking out the money changers? n/t

[SOS]

4. Hopefully

If Citibank wants to charge NYC residents 29% interest, that's OK.
But the City would then divest all of it's holdings in Citibank.
Their choice.

This is the type of creative legislation that could really make a difference.

[slipslidingaway]

5. kick for later n/t

[closeupready]

6. Terrific.

Totally support this.

[spin]

7. Reforming the credit card industry should be a TOP priority...

Drastic jumps in interest rates have occurred even when a cardholder has had a record of paying on time, like in the case of Carita Marie Gamble.

The 72-year-old grandmother, who lives on a fixed income, was shocked to see her rate jump from about 16 percent to more than 26 percent last month.

"This has put me over the top financially," said Gamble, who has emphysema and had a tracheotomy.

Her monthly income of $1,100 has taken a huge hit now that her credit card bill has increased more than $400.
http://abcnews.go.com/GMA/story?id=4277250&page=1

One way to make sure that we have a long term recession or possibly a depression is to allow the credit card companies to rob their customers merely because the law permits it. Many people live paycheck to paycheck and struggle to make payments but do. Unfairly increasing their interest rates will cause them to go underwater.

Congress is producing some hot air about this issue. We need to force our elected representatives to turn words into action.

The hearing put credit card issuers on notice that change may be on the way. Dodd introduced legislation in the previous Congress that would ban certain penalty fees and mandate clearer disclosure of credit card terms and is expected to introduce a tougher version of the bill this year.

Still, Prof. Warren warned that Congress has a limited window of opportunity in which to act.

With the continuing slump of housing sales causing more defaults and foreclosures, and job growth continually shaky, consumers need help from their debt.

"Americans benefit from markets that work," Warren said. "If Congress repairs the busted credit card market, then Americans -- consumers and businesses alike -- will benefit as well."
http://www.consumeraffairs.com/news04/2007/01/congress_credit_cards.html