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What’s Missing from the Credit Card “Reform” Bill

If these men had known Obama was coming, they would have laughed even harder

If they had known Obama was coming, they would have laughed even harder

Today President Obama signed the so-called “credit card reform bill” into law along with his usual prissy lecture about how Americans have to learn how to behave themselves.

“We’re not going to give people a free pass, and we expect consumers to live within their means and pay what they owe, but we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives,” Obama said at a signing ceremony in the Rose Garden.

I think he had his fingers crossed behind his back when he mumbled the part about financial institutions behaving responsibly. Anyway here’s what the bill is supposed to do (if banksters were nice, supportive people who wouldn’t take advantage of every possible loophole).

stop arbitrary interest rate increases and “universal default” on existing balances. In universal default, a lender can change a cardholder’s account to costly “default” terms from normal terms when the lender learns the cardholder missed a payment on an account with another lender, even if the cardholder has not defaulted with the first lender

stop card issuers from raising rates for a cardholder in the first year after an account is opened, and require that promotional rates must last at least six months

stop issuers from charging fees for spending beyond their limits, unless the cardholder chooses to allow the issuer to process the excess spending, and restrict any “over-limit” fees

require penalty fees to be reasonable and proportional to the cardholder’s omission or violation

require that cardholders be told how long it would take, and the interest cost involved, in paying off a card balance if they make only the minimum monthly payments

require that cardholders must get 45 days’ notice of interest rate, fee and finance charge increases

Except…if you are more than a month behind on your bill, all bets are off, and your rates can go sky high.

What’s missing from this bill (and what makes it pretty much a toothless sham) is limits on credit card interest rates. There is still no limit on the amount of interest a company can charge you. Usury is still legal. Bernie Sanders tried to save the day, but no dice. The banksters win again.

Before the Senate voted Tuesday, it considered several amendments, not all of which pertained to credit cards. An amendment by Sen. Bernie Sanders, I-Vt., that would have capped credit card interest rates at 15 percent failed.

So there is still no limit on how high interest rates can go. Right now, if you make a late payment, your rates can be jacked up to 40%! If that isn’t criminal, I don’t know what is. With the new law, the companies will have to give you 45 days’ warning before they raise your interest rate sky high.

The other important catch is that banks have plenty of time to raise your rates as much as they want before the bill goes into effect. And banks are already threatening to start charging fees and limit credit.

Critics say help for Americans battling back abusive credit card practices may arrive too late. The Senate bill would take effect in nine months, enabling credit card issuers to jack up interest rates and fees for millions of cardholders ahead of the new regulations.

In fact, an estimated 10 million people holding cards from the eight largest issuers have already seen interest rate hikes of as much as 10 percentage points, according to the Center for Responsible Lending. The issuers—Citigroup, Bank of America, Capital One, HSBC, Discover, American Express, JPMorgan Chase and Wells Fargo—sent out rate increase notices after the Federal Reserve Board in December approved new rules restricting how credit card companies do business. Those rules become effective July 1, 2010.

Predictably, the whiny banksters are having tantrums over this bill, which really isn’t going to help consumers that much anyway. In fact the banksters are saying it will end up costing us all more in the long run.

Banks have repeatedly warned higher interest rates are likely to result because it will be more difficult to set rates based on the risk that customers pose. The higher rates mean less credit available for consumers, they say.

The industry is already experiencing heavy losses from the 90 million households that carry cards. The losses are expected to worsen as the year goes on.

“A lot of consumers have a false sense of security they’re going to get relief,” said Curtis Arnold, founder of CardRatings.com in Little Rock, Arkansas. “The average rate now is 13.8 percent, and I could see it going north of 15 percent by early next year.”

Issuers can try to make up lost revenue from customers who are new or have good credit — about one-third of U.S. cardholders generally pay their bills on time.

Let us never forget that Senator Barack Obama voted against setting a cap on credit card interest rates at 30%. Did anyone really think he would stand up to the banksters this time? By the way, Senator Hillary Clinton voted for that cap on interest rates back in 2005.

I’ll bet you’re wondering if there is any good news about this credit card “reform” bill. Well if you you like guns, there is. Bernie Sanders’ amendment went down in flames, but the amendment to allow people to carry concealed weapons in our national parks made the cut! Ain’t that great?

46 Responses

  1. (throwing up) Nice isn’t the word I’d use.

    I don’t get why this thing is being sold as something good for consumers.

    • kb,

      First, they sell the pitchman. Then they sell the product.

      s

    • Of course, the credit rating system that determines our interest rates on auto loans, mortgage loans, and whether we get decent car insurance rates, can rent an apartment, or get a job are tied to whether or not we have the correct number of credit cards with ongoing activity to prove we are credit worthy.

      What a scam.

      • those idiots can’t even get my address right. they have my permanent address as a house in Omaha I haven’t lived in fro like 15 years and I can’t get them to change it. They’ve also had wrong jobs for me and all kinds of things.

        • Exactly. I wrote to my senator, Maria Cantwell, once to beg her to start something about this. I suggested that the weight of influence these credit agencies have on some of our most critical decisions and obligations mandates THEY be obligated to be accurate at a MUCH higher level than they are. She wrote back. Her response defended their right to report…totally off-topic. I was appalled and decided the woman was going to have to fight really hard to get my vote again.

        • Tell me about it dakinikat! The credit reporting companies have made my life hell for the past 3 years. When a man with the same last name added his daughter to his credit card, they confused me with the daughter (same first & last names and same middle initial). I have not been able to get credit for 3 years because of this and yet this young woman gets credit offers based on my credit history and SS number!

          And, as you probably know, it’s not like you can call up and talk to a real person. All communication has to be sent via mail and the only responses I ever get back are letters that look like they were spit out by a computer program.

          The amount of time, effort and stress that has entailed is infuriating. These companies should be held liable for the misery their mistakes create. There really ought to be a law but, as usual, our lawmakers are on the side of the companies and not the citizens.

  2. Did you see the part about the guns?

  3. i got a new blackberry and i’m obsessed with figuring it out and setting it up

    • When you figure it out, will you help me? I still haven’t figured out mine. I set it up, but I promptly forgot how to do everything.

      • lol, for some reason my fingers don’t have much success with touch screens … not sure if it’s because i played so much piano and guitar Ive basically killed all the nerve endings or what

  4. backtrack has the nerve to say ” we are not going to give the people a free pass’?
    this a$$ has had a free pass all his life.
    We have to throw the rascals out the next election or we will not have a country left. If any congressman is in office and runs in 2010 vote them out. They haven’t worked for the people they represent in years. Let them try to pay the credit card rates on unemployment.
    Should be interesting. But I guess they will get jobs with the credit card companies.

    WOMEN WITH INTELLIGENCE AND EXPERIENCE, MEN WHO SUPPORT THEM AND COUNTRY BEFORE PARTY ALWAYS

    PUMAS,BUBBAS, EQUALISTS AND THOSE PEOPLE RULE

  5. Ahahahahahahahhahahaha. Ahahahahahahaha….

    http://www.politico.com/news/stories/0509/22863.html

    The White House, get this, is a national park!

    Ahahahahahahahaha…..

    • LMFAO! *dies*
      So much beautiful irony! It is blinding! MY EYES!

    • I love politico bending over rbackwards to say how deeply opposed obama and the Democrats are to this, but of course, of course, they can’t put up even a little fight because they don’t want to “distract” from a ceremonial sham bill that will have no effect.

      I’m sorry, but if you won’t put up a fight over a ridiculous provision to carry concealed weapons in national parks–is there anything you won’t get rolled on? Why not just skip the pretense already.

      • In for a penny, in for a round, or two, or more. I say no exceptions to this baby. Thirty-eights in the Rose Garden? Only fair if the Grand Canyon has to take ’em.

      • What about putting up a fight to end usury in the 21st Century? Remember when it was illegal? These days you can probably get better interest rates from the local “shylock.”

  6. I’ll bet you’re wondering if there is any good news about this credit card “reform” bill. Well if you you like guns, there is. Bernie Sanders’ amendment went down in flames, but the amendment to allow people to carry concealed weapons in our national parks made the cut! Ain’t that great?

    And once again, the priorities of America’s great Congress are a beacon of Governace to all.

    Great post BB! I am off to bed, but I will go to sleep knowing that I am going to be paying off my one measley student credit card until I die.

    • You can always declare bankruptcy to get out from under the credit card debt, but your students loans will haunt you forever. Trust me, I know. Mine won’t be paid off in my lifetime.

  7. Get me out of moderation BB! Night!

  8. Who’s the guy to the far right in the picture above? It looks like he cracked the joke they’re all finding so funny. That picture makes me queasy.

    • Looks like it could be Buchanan. Then again, it could be Uncle Biden.

    • I don’t know, but the guy in the doorway looks like David Gergen. And Ed Meese is on his left.

  9. OT
    I think this will make some people feel better tonight.
    At No Quarter there is a post about Hillary Clinton keeps her word. She just got benefits for domestic partners of State Dept employees.
    It is one good thing today even though I wish I was saying Madam President Clinton.

    WOMEN WITH INTELLIGENCE AND EXPERIENCE,MEN WHO SUPPORT THEM AND COUNTRY BEFORE PARTY ALWAYS

    PUMAS,BUBBAS,EQUALISTS AND THOSE PEOPLE RULE

  10. I remember his prissy and disingenuous defends of not capping interest rates during the debates because “it was too high.” So–is 15% too high now too? Better to do nothing, I guess. Since I do not watch MSM, I can only assume they are all gushing about how wonderful this is, and how much BO is out there fighting for the little people. Blech.

    • For I am Barack Obama, King of Weasels, look on my lack of works ye chumps and despair…

  11. ie: defense

  12. Bernie Sanders……hmmmmmm isn’t he the socialist? I thought socialists were the evil/snark

    God forbid the Democrats were socialists then we might have actually had real reform that forbid corporations from taking advantage.

    I have little doubt that Barry the non socialist was happy to keep as close as possible to status quo. Gotta keep the money flowing in campaign contributions for re election.

  13. Bernie Sanders……hmmmmmm isn’t he the socialist? I thought socialists were the evil/snark

    God forbid the Democrats were socialists then we might have actually had real reform that forbid corporations from taking advantage.

    I have little doubt that Barry the non socialist was happy to keep as close as possible to status quo. Gotta keep the money flowing in campaign contributions for re election.
    P.S. – Sorry, forgot to tell you great post!

  14. Yup. I remember from the debates that Mr Post-partisan was against caps. This bill is as helpful as W’s bills where polluters voluntarily agreed to pollute less. Or, the health insurers pretend to charge less than they might have charged otherwise…Jr.jr strikes again!

  15. I was lsitening to NPR yesterday for a brief moment. There was a reporter on talking about how the public was not misled by Obama. That he never said things about policy that were projected by his supporters. They assumed them based on what type of perswon the believed Obama to be. I wanted to scream at that reporter for it was them that helped the people do that. It was the media that allowed these “projections” without any true analysis. They spewed the talking points distributed by the campaign without comparing them to Obama’s past actions like his “present” votes while in the Illinois legislature, his lack of candor and especially the mem about his Kansas background, “mother on food stamps bit”. The man doesn’t have a clue about his own country. He’s traveled the world but never to rural areas in his own country. He’s seen poverty in the cities but never seen rural poverty where there are no resources or representation or money. I think of Appalachia where he didn’t even bother to campaign.

    • Just think of all the students Obama taught “Constitutional law” to during his career at U. of Chi. What a nightmare! Did he pass on his complete lack of ethics and core values to them? Or are some of them shocked now that their prof. has been revealed as worse then Bush/Cheney?

    • The man doesn’t have a clue about his own country. …

      True. But Barry doesn’t have a country. He has a class.

      Also your points about the media pretending they don’t know where people got these ideas from is well taken. I saw the cover of Time about ” The making of M O”
      That is part of the event you are speaking of
      The media push hard the PR and then later wonder were folks got the ideas found in the PR . Same thing happened over the Media’s selling of the war….the” who me?” follows the hard sell.

  16. Thanks for all the information about this bill Boston Boomer. With the Dems patting themselves and their wondrous leader on the back and the media praising too it’s hard to get a real feel for what exactly this bill does and doesn’t do.

    Not enough it appears.

    And just wondering, what the hell is a gun law doing in this bill? And what a law!

    Too bad we no longer have a competent or un-corrupted Democratic Party. Because the party I belonged to for 40 years would have been appalled at a law that makes it fine and dandy to carry a concealed weapon in a National Park.

    What were they thinking? Were they thinking? Or do they just depend on the stupidity of their followers to not notice this little teensy problem? Or if they notice that they will find some hair-brained excuse for it?

    • I don’t know what there were thinking. I guess they wanted to pass some cosmetic credit card “reform” to make Obama look good. In order to get Republican votes they voted for the bill with the gun amendment in it. Why do people need guns in national parks anyway? Are they expecting to be attacked by bears?

  17. they only criticize to others

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