Thursday, April 23, 2009
Credit Card Companies Are Criminal Enterprises - Loan Sharks - Who Pay Off The Cops.
I could not even begin to address the criminality that is the essence of the credit card industry.
In order to understand credit cards, we need to recognize that most banks will loan people money for a modest interest rate. If the borrower has some assets -- a house, for example -- as collateral.
But for working people with few assets, the only loan they can get is from the credit card companies or the loan sharks -- same difference -- at outrageous interest rates. The interest charged does not reflect the "risk" of the loan, the number of defaults, the difficulty in collection, or any of the other stories they always tell us. They charge it because they can get away with it, just like the mob does.
Every once in awhile, some leading Democrat has a press conference and insists they're going to "get tough" on credit card companies. But it's all just a show -- a circus to divert the public from the truth, which is that most of the Senators and Representatives take bribes from the credit card companies. Take bribes to look the other way when the credit card companies steal everything from the working people of this country.
Most countries in the world have laws about usury. We do too. They prohibit people from charging excessive interest on a loan. For most of us, for example, if we loan money to somebody, we can only charge a certain amount of interest -- around 10% in most states.
So why don't the credit card companies have to obey the laws about usury? Because they paid bribes to the politicians in Congress to get a special law saying that they don't have to obey those laws. It's just straight-up corruption.
Credit card companies are thieves, the same as the street hoodlums who hide in alleys and knock people over the head on their way home from work, steal their wallets. The credit card industry is responsible for stealing trillions of dollars from working people in the U.S. every year.
We need serious new regulations of this industry. The absurd "disclosure" additions to the law, put into place by Wall Street's favorite Senator Chuck Schumer, does absolutely nothing to help the people. So what if the Loan Sharks have to "announce" what they plan to do right before they break your legs? Disclosure does not cure or solve theft and fraud. Chris Dodd recently announced his own "get tough" new rules, which are also garbage. From now on, when they send you a statement, they have to put it in 9 point instead of 8 point type. Just absurd "reforms" which do nothing to help the people of this country.
When working people's wages are being crushed by corporations sending jobs outside the country, when the cost of everything is artificially raised by corporations manipulating the markets (i.e. the oil companies), most people need to borrow money to pay for emergencies. When the only loans available come from the Loansharks, then having a law that makes them "disclose" that they will charge obscene amounts does nothing to help working people. Thanks for nothing Chuck Schumer and Chris Dodd. And Congress, which just this week asked President Obama to "talk" to their biggest contributors, ask them to please be nicer. Yeah, that'll do it.
Here's some shocking numbers on the Loan Shark industry in the U.S.:
Let's talk about a few of the biggest problems. This is what Congress needs to change. Now.
1. Usury. Credit cards should have a maximum interest of 10%.
2. "Late" Fees. Late fees should be illegal. If someone is late, the interest keeps running so the credit card company loses nothing.
3. Over-limit charges. Straight theft. They lose nothing if somebody charges over the limit.
4. Cash advance charges. Absurd. Enormous charges on top of the obscene interest rates for, essentially, somebody borrowing a couple of hundred dollars.
5. Dragnet clauses. If you default on your car loan from another lender, then the credit card company will "drag" that default into the credit card account, and raise your interest to 25%. Ridiculous. The two things have nothing to do with each other.
6. Mailing location for billing statements. They tell people the due-date is, for example, the 28th of the month (more below). Somebody in California puts the check in the mail on the 25th or 26th, but their payment center is in God-knows-where Maine, rural, with poor mail service, to maximize late fees.
7. Due-dates chosen to maximize late payments. Due-dates are generally the 28th of the month, or the 13th, around there. They know people get paid on the 15th and 30th, will write the check out the next day, and are more likely to be late. All due-dates should be on the 20th of the month.
8. Interest independent of what the loansharks pay us to borrow our money. Credit card companies borrow my money, taxpayer's money, from the federal government, and pay less than 1% interest per year. Then they turn around and charge 25% per year on credit cards. Their total "costs" consist of paying some 12 year old girl in a third world country about $1.00/day to sit in front of a computer and process payments, issue new bills. They're making a killing off of us. And Congress knows it, and they let them because they get kick-backs. Interest for credit cards should be capped at 10% but also tied to the federal discount rate -- say 5% more than the lowest federal discount rate for the preceding 6 months -- which means today's rate should be 6% on credit cards.