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The Spectacle Blog
President Obama “invited” credit card company executives to the White House and threatened them today.
Egged on by market-hating liberal activist groups, Obama implied if lenders don’t play ball, there’s going to be trouble. Meanwhile, lawmakers are tripping over each other in a competition to see who’s best at denouncing the evil capitalist money lenders.
So, on the one hand the government is giving money to banks to help keep them afloat, and then with the other hand it wants to kneecap them by hindering their ability to make a profit.
And we recently learned that perpetual bumbler Treasury Secretary Timothy Geithner is refusing to allow banks to pay back emergency aid because letting them do so would reduce the administration’s leverage over them. If banks pay the money back, then the government can’t squeeze them any more for the vig.
Is the Obama administration serious about economic recovery or is this approach inspired by the Cloward-Piven Strategy of orchestrated crisis? Making the banks the bad guys for decades to come would certainly serve the left’s political purposes.
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More Blog Posts by Matthew Vadum
http://spectator.org/blog/2009/04/23/nice-credit-card-company-there
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Pingback| 4.23.09 @ 9:00PM
Nice Credit Card Company There. Shame If Something Happened To It. | But As For Me links to this page. Here’s an excerpt:
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Topics about Lenders » Nice Credit Card Company There. Shame If Something Happened To links to this page. Here’s an excerpt:
Michael Dooley| 4.24.09 @ 8:02AM
Egged on by market-hating liberal activist groups? That may be so. But also "credit" the fact that credit card companies haven't exactly made a lot of friends for themselves in the last few years. Fees jacked up. Interest rates increased. (Discover Card wasn't making enough money during this economic downturn so it increased EVERYONE'S rates) And, of course, systematically lowering credit limits or canceling cards entirely regardless of customer history.
So Omaba is "talking" to them. If it's like his recent "I'm Sorry" overseas tours, he'll get nothing from the plastic cards. Congress, however, may be a different story.
Capitalism is a double edged sword. The banks can act according to "it's just business". But "it's just business" works for customers, too. I've withdrawn all my accounts from those banks who had turned hostile. That's how it should be done.
I am less than pleased to have the government handle the matter. Still, as the government begins to turn up the heat on the credit card industry, a part of me is thinking "it couldn't happen to a nicer bunch of guys".
Becky| 4.24.09 @ 9:35AM
Is there a law somewhere that the only way to obtain credit or buy things like clothes, etc. is with a credit card? A lot of people use credit cards for the ease of completing a transaction, or comfort of having one in your pocket if you are in an emergency. If you pay off the balance every month, you are benefiting more than they are.
A realator commented a few months ago on the housing foreclosure mess, that you would find that many of those that overbought, also had new cars on leases and a pocket full of credit cards.
The real story is not about the high rates and fees, that's been around for years. It is about not wanting to fullfill a contract when it is not to your benefit anymore. Student loans are defaulted regularly, as were the low interest mortgages. A Detroit city councilman just walked away from his house recently, not because he wasn't employed, the house wasn't worth paying for anymore in his opinion.
Tim| 4.24.09 @ 10:23AM
The Emperor: [In the throne room, watching the Imperial fleet attack the banks from the huge throne room window] As you can see, my young apprentice, your friends have failed. Now witness the firepower of this fully ARMED and OPERATIONAL banking station!
[the Emperor hits the comlink switch on his throne]
The Emperor: Fire at will, Geithner!
Bob| 4.24.09 @ 10:48AM
I see you don't know much about the credit card industry, Vadum. Historically, there were many states that had usury laws. Without these laws, interest rates rose as high as 35%-100% in some states. Since these rates were used against the the lowest socio-economic strata, there was no attempt to reign these rates in. To get around usury laws, the credit card companies turned themselves into "national banks" so they wouldn't have to follow state laws. Most of the usury laws limited rates to 12-18%.
The problem was the same in the credit card industry as it was elsewhere, as they securitized and sold off the receivables. Thus, they would give a card -- sometimes many cards -- to practically anyone. In order to cover their mistake in extending credit, they would charge ultra high interest rates. The customers who had the credit problems were not the ones that paid as they just filed bankruptcy. It was those with good credit that paid the price. If you think that is "fair", then I'd question your morals.
In addition, many of the programs had "introductory" rates that have doubled or tripled over time. You know, the next step is the requirement of fees on all cards and charging interest from the day of the purchase even though you may pay off the remaining balance completely every month.
Furthermore, there has been a very large consolidation in the industry and thus you do not have any real competitiveness anymore -- especially when BofA purchased MBNA.
Instead of throwing bombs, Vadum, you should do some research...
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