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Feel-good lawmaking: Credit card reform
Banks would disagree, but consumers — and both parties — are onboard
Sunday, May 17, 2009 | 2 a.m.
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Congress is hoping to do for credit card borrowers this week what it could not accomplish for homeowners: Sock it to the banks that have become targets of so much populist anger about the nation’s sorry state of financial affairs.
Clark County has one of the higher rates of credit card delinquency in the nation, not a surprise in the foreclosure capital of Las Vegas, where the unemployment rate is above 10 percent. Studies show a correlation between regions with high mortgage defaults and missed credit card payments.
Legislation has been methodically making its way through Congress that would ban credit card companies from random interest rate hikes, exorbitant fees and other practices — such as mailing the statement two weeks before the due date.
The bill is popular. Anyone who has marveled at the inner logic of his monthly credit card statements can appreciate such reforms.
The legislation passed the House and is on its way to passage in the Senate. In fact, almost two-thirds of the House Republicans joined an unusual bipartisan vote. Democratic Reps. Shelley Berkley and Dina Titus voted for the bill. Republican Rep. Dean Heller was among 69 Republicans voting no.
President Barack Obama wants the bill on his desk by Memorial Day.
Credit card reform has all the makings of a political winner — bipartisanship, popular support and, as noted in the case of one Las Vegas woman Senate Majority Leader Harry Reid has been quoting all week, the righting of a perceived wrong.
The woman wrote to Reid to complain about the bank raising her credit card interest rate from 9.5 percent to 17.5 percent. “ ‘I feel like I am being robbed by a company that my tax dollars are trying to bail out,’ ” Reid quoted from her letter.
Yet bipartisanship in Washington goes only so far. It’s one thing to play nice. It’s another to knock the dominant political party off its perch.
Passage of the credit card bill is increasingly a sideshow as the real victory this week will come if Republicans gain traction on any of the many obstacles they have thrown in the path of the Obama administration’s run of legislative successes.
Last week, it was guns.
One of the many Senate amendments to the credit card bill would allow licensed firearms to be taken into national parks — a policy put in place in the waning days of the Bush administration that Obama may reverse. It passed, with Reid and Republican Sen. John Ensign voting yes.
More potent, though, have been conversations happening off the floor dealing with other parts of the Democratic agenda.
Ensign, for example, just back from a day trip to the detention facility at Guantanamo Bay, Cuba, escalated criticism of Obama’s plan to close the camp, tapping into the popular unease over terror suspects being relocated to U.S. soil.
The credit card bill is scheduled for a vote Tuesday. Banks continue fighting the bill, warning that it will raise the costs of borrowing and tighten credit.
Banks made the same argument as they helped defeat housing legislation last month that would have allowed bankruptcy judges to rewrite mortgages, a provision that failed in part because there was never much popular support.
Kathleen Keest, a senior policy counsel at the Center for Responsible Lending, is watching the finish line.
“This makes a boatload of difference to people’s wallets,” Keest said. Interest rates were raised by 17 percent on average in 2008, costing the average borrower with $10,000 in debt $1,800. “That’s a lot of money, more than is justified,” she said.
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These banks and their scheme of lending credit is a house of cards. For national banks (Bank of America, Chase, Citi, Wells Fargo and so on) it is something they have never been legally allowed to do. The operative term is "ultra vires the bank" and boils down to all those cardmember agreements are void. Kind of like someone signing a contract with a 17 year old -- it's dead paper.
Their houses are inevitably collapsing. They should be allowed to face reality like the rest of us. And that reality is everyone should stop paying until these banks prove the agreements/contracts they rely on to create these "debts" are actually valid and enforceable.
Anyone notice the flood of "credit card agreement modification" notices that have come out in the last few months? I say that they have completely countered whatever obama wants in this bill.
Whatever obama does is dwarfed by what individuals can do on their own. Credit card companies, banks, cell phone companies, and insurance companies are very untrustworthy in general in my opinion, and I just dont trust any of them. I use them as minimally as I possibly can. If other people did the same, they would CHANGE on their own.
Look at all the pain and suffering the credit cards have wreaked in our economy. How about we just really CUT BACK ON THEIR USE VOLUNTARILY. The card companies are just encouraging us to take the 'free' money and then stick it to us once we are in debt.
I recently paid off a Chase card after they charged me $39 late fee for being $3 too low on a minimum payment. They refused to listen to reason and remove the ridiculous charge. I told the gentleman it would NEVER happen again (as I was cutting up the card in small pieces).
Interesting that in about a month I get this letter asking me they noticed I paid off the card and was their something WRONG? Too late, CHASE, you lost a customer forever. My point is that the way to exercise consumer power is to STOP using their product.
a credit card company can do nothing unless a nonresponsible adult person makes charges that he/she knows that they cannot pay off .....the greedy , we want it now public is to blame, lets put blame where it belongs....people spend more than they earn, simple solution, watch y our money better and save for things that you want ....we are our own worst enemy