November 28, 2008
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News: CC Reform: All the right moves.
One of the most paradoxical conundrums American credit card consumers are having today is how to reinforce the credit card industry without reinforcing their ways. Everyone knows we need the credit card industry to be strong, but not at the expense of weakening the consumer. So, as we are embarking on awarding $200 billion to this and similar industries, most American consumers have very strong feelings that all the appropriate strings are securely attached.
In the aftermath of a negligent Bush admin, much is to be done in trying to restore order in a waning culture of deregulation. The new realization is the expediency of balance. Not too much regulation but not too little, either. Sen. Robert Menendez, D-N.J., has recently submitted legislation in a bill called the "Credit Card Reform Act of 2008", addressing this very issue. In this bill, he is advocating robust restrictions on unfairly jacking interest rates to extreme levels, taking advantage of the young with nebulous promises and unfairly slamming well-meaning consumers in good standing with unfair and exorbitant penalties for slight mishaps and unrelated situations. As he says: "We're seeing a confluence of issues." His message is that the time is ripe for true credit card reform.
Consumer Federation of America's legislative director, Travis Plunkett agrees. He states that: "It makes no sense at all for the government to protect or increase the availability of credit card loans while allowing credit card issuers to continue to use unfair and deceptive practices". University of Illinois bankruptcy law professor, Robert Lawless builds the case further. He charges that our "card industry has built a profit model off of people's mistakes." This has to stop, he says. "The American people won't want to be co-owners of an industry that uses trickery to make money off the backs of the middle class." Consumers Union senior attorney, Gail Hillebrand adds "We certainly should not be spending our tax dollars supporting rip-off practices while waiting for credit card reform."
So what's being done? Since the government is bailing out the credit card industry, they will be the ones pulling the strings. The assistance is a money handout at all. It's a backup security against borrower risk, alleviating the industry from the responsibility of hard-ball tactics based on fear, that end up overcompensating the industry itself. In addition, further restrictions are being imposed to protect the consumer. Right now, the government has ‘unprecedented leverage' for proper reforms and the community is getting deeply involved.