Hullabaloo

Tuesday, November 24, 2009

 
Usury For Dummies

by digby

Frontline tonight should be good:

As credit card companies face rising public anger, new regulation from Washington and a potential perfect storm of economic bad news, FRONTLINE correspondent Lowell Bergman examines the future of the massive consumer loan industry and its impact on a fragile national economy. In a joint project with The New York Times, Bergman and the Times talk to industry insiders, lobbyists, politicians and consumer advocates as they square off over new regulation and the possible creation of a consumer finance protection agency. How are the credit, debit and pre-paid card industries repositioning themselves to maintain high profits under the new rules? The stakes couldn't be higher as many fear the consumer loan industry could be at the center of the next crisis.

I continue to believe this is a huge problem and a huge opportunity for Democrats to place themselves as the voice of populist reform. While the teabaggers screech hysterically about FEMA Camps and "hundred year plans," the progressives could actually be doing something tangible and important for actual humans.

"I think this new Pew report says it all." --Lowell Bergman, correspondent for the FRONTLINE/New York Times joint report The Card Game, airing November 24th.

One hundred percent of credit cards offered online by the leading bank card issuers continue to include practices that will be outlawed once legislation passed in May takes effect next year, according to a new report by the Pew Health Group's Safe Credit Cards Project. The report also found that advertised credit card interest rates rose an average of 20 percent in the first two quarters of 2009, even as banks' cost of lending declined. With the Federal Reserve currently developing rules to ensure penalty charges are "reasonable and proportional" as required under the Credit CARD Act, the report also includes policy recommendations for regulators.

Key findings of the report show that:

-- 99.7 percent of bank cards allowed issuers to increase interest rates on outstanding balances -- a jump from 93 percent in December;

-- 95 percent of bank cards permitted issuers to apply payments in a way the Federal Reserve found likely to cause substantial financial injury to consumers; and

-- 90 percent of bank cards had penalty rate hikes with the vast majority imposed by "hair triggers" of one or two late payments in a year

It's a scandal that people are talking about everywhere but on television and in the papers.


.
digby 11/24/2009 04:30:00 PM |