American Culture

Congress, candidates call credit card companies on the carpet

By Martin Bosworth

Just in time for the holiday season, the 110th Congress has renewed its push for credit card companies and lenders to clean up their act. Michigan Democrat Carl Levin, who sits on the Senate’s Homeland Security and Gov’t Affairs Committee, is chairing a hearing today on unfair credit card interest rate hikes, featuring three financial industry bigwigs against three undoubtedly angry consumers. (Fun fact–Bank Of America Card Services prez Bruce Hammonds used to be president of MBNA, widely recognized as one of the most egregiously evil card companies in the business, until Bank of America swallowed them whole.)

Levin and fellow Senator Chris Dodd previously called credit card companies out for hearings in January of this year, which led the financial industry to voluntarily end some of their nastier credit card practices (such as “double-cycle billing” and “universal default”) to avoid being grilled or regulated on Capitol Hill. Levin, along with Claire McCaskill, has also introduced legislation to rein in the most abusive lending practices of the credit card industry.

Meanwhile, Barack Obama has put the issue of abusive credit card practices front and center in his campaign by calling for a “credit card bill of rights” that would offer citizens more protections against dirty lending tricks:

“Every American has a responsibility to pay what they owe, but we need to make sure that what they’re paying is fair, and we’ve got to do more for those Americans who aren’t able to climb out of debt and actually have to declare bankruptcy,” he said, promising reform of bankruptcy laws if elected president.

When I wrote recently that Democrats should run on the economy instead of Iraq, this is exactly what I was talking about. This is as clear-cut and obvious an issue you can get that cuts right to the heart of both the American economic crisis and the strength of the Democratic party. Put more simply, the credit card industry is almost universally loathed, and you’d be hard-pressed to find a better target for Democrats to rally around than this particular form of economic terrorism.

I’m glad to see they’re getting the message, and I hope they ride that train all the way through the elections and use the momentum to pass real reforms–America’s working families and debt-plagued consumers need all the help they can get.

7 replies »

  1. Martin,
    is the US the only place where credit card companies are allowed to have predatory (aka loan sharking) practices?

    How is the US compared to other countries?

  2. “When I wrote recently that Democrats should run on the economy instead of Iraq, this is exactly what I was talking about. This is as clear-cut and obvious an issue you can get that cuts right to the heart of both the American economic crisis and the strength of the Democratic party. Put more simply, the credit card industry is almost universally loathed, and you’d be hard-pressed to find a better target for Democrats to rally around than this particular form of economic terrorism.”

    I couldn’t agree more.

    Too many of us are living lives as indentured servants. I haven’t used a credit card in at least nine years, but am still paying off Sisyphean debt (which didn’t seem all that great at the time). That’s money we could have saved (ideally) for retirement or bought a house. Can’t dwell on it too much.

  3. Dom,

    Unfortunately, usurious lending isn’t a uniquely American concept. Canada, Australia, and the U.K. are all suffering record levels of credit card debt and negative savings levels.

    The financial industry is global, and their reach is long.

    Russ,

    I feel you. I never had serious credit card debt, but I’ve had other kinds of debt that were nearly as bad. It’s a nightmare, and all you can do is find ways to get it paid off as soon as possible.

  4. When one has $1000 Visa bill (like after Xmas), but can only afford, say, $750, come D-Day (due date), it strikes me as patently unfair (unconsittutional?) that interest for ALL $1000 is owing instead of the $250.

    When you think of the built-in inequities that result, it’s small wonder that the rich get richer off the backs of the sinking poor, who in most cases are no doubt trying to the right thing.

    Are there any studies done in Canada/USA regarding same? Has there been any court challenges?

    DN

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