Credit Card Reform?

By
Real Estate Agent with CENTURY 21 All Islands

Finally, the Obama administration is trying to rein in the credit card companies. Because congress is at the beck and call of the credit card lobbyists, they have been stalling on enacting any credible credit card reform. Even though the U.S. Federal Reserve has already drawn up new rules to protect consumers, they aren't scheduled to take effect until July 2010.

Get this quote from Edward Yingling, president of the American Bankers Association, the banking industry's lobbying group. "The [banking] industry understands the concerns about credit cards, but the administration should fully recognize the impact of the Federal Reserve Board regulation, which is one of the strongest consumer- protection regulations ever adopted". Yeah, right.

In the meantime, the credit card companies are having a field day! They are cranking up rates to usurious levels, Many people who have been stellar credit users are suddenly finding that, because of actions taken by the credit card companies, their credit scores are being destroyed, their credit histories being compromised. In effect, the credit card companies are destoying peoples financial reputations. 

All of this is happening while the American, indeed the world's economy, is in a fragile state. People whose finances are being strained due to current circumstances, are finding that their "last resort" source of security, their credit ratings, are being furtively stripped from them. The credit card users who have played by the rules, been responsible, and proactively constructed a credit history in the proscribed manner, are having the rules changed on them, to their extreme detriment.

Particular criticism is due to those Banks that raised rates on some existing card holders even as the banks received federal bailout funds. The lame excuses put forth by the banks, is that  "credit-market conditions" and "changes in borrowers' credit scores" necessitated the increases. Let us remind them: the "credit-market  conditions" and "changes in borrowers credit scores" are for the most part due to the shenannigans and deceptive practices of the credit card companies themselves. They created the problems, then want to punish the consumers by increasing rates and lowering credit limits, because of the effects their policies have had on the credit consumer.

President Obama is taking action now! On Sunday, on NBC's "Meet the Press", Larry Summers (Pres. Obama's top economic advisor) quoted Obama's statement that "people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into". Tomorrow, (Thursday, April 23, 2009) President Obama, Summers, and several other key economic officials, including Treasury Secretary Timothy Geithner, are meeting with top executives at banks with large credit card divisions. Let us hope that some real reform comes out of this meeting.

During his presidential campaign, Obama laid out a pro-consumer credit card reform plan. Currently, the administration is backing legislation to crack down on credit card companies, including major players like VISA and MasterCard, that hike interest rates on unsuspecting customers. Obama also wants to establish a credit card "bill of rights" that would ban universal default, prohibit unilateral changes to contracts and also prohibit credit card issuers from charging interest on fees.

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Anonymous
Anonymous

This is what has happened to my grandmother who is on a fixed income.  She has everything set up for automatic payment and her payment on her WaMu card was higher than her auto payment was preset for.   She has always paid over the amount due for as long as she had the card.  Since the payment was for less than the minimum they charged her a late charge and then raised her rate from 9% to 21%.  The caused her payment to go from $35 per month to $75 per month.  There was no way to make the payments on those terms.  I advised her to contact them to renegotiate the payment.  They refused.

She has since stopped making payments to them because she has to put food on her table and keep a roof over her head.  Yes, money is that tight when you are 88 and only receive social security.  That's a whole different story.  Now she get's phone calls three times a day trying to collect for the $1,700 debt.  Now they are trying to collect for a $3,200 dollar bill.  She has even written to them to ask them to stop calling because she can't pay for something that she doesn't have the money for.

Collection Agencies are another area that needs to be overhauled as well.

Apr 26, 2009 08:20 PM #1
Rainer
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Michael S. Mackey
CENTURY 21 All Islands - Mililani, HI
REALTOR ABR, CRS, GRI, RSPS

Tammie Jungling, CPMS (Capstone Home Mortgage, An affiliate of Wells Fargo Home Mtg) Tammie, this story is just heartbreaking! This kind of behavior by the credit card companies is exactly the reason we have started the Credit Card Revolution! Please check out the Credit Card Revolt group, and consider joining. It would be great if you could re-post this story there too! We cannot tolerate this kind of behavior any longer.

Apr 27, 2009 10:09 AM #2
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Rainer
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Michael S. Mackey

REALTOR ABR, CRS, GRI, RSPS
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