February 26,2009
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News: Onward & Upward Credit Card Reform?
Senator Chris Dodd's credit card reform bill continues to gain ground as our consumers continue to be weather-beaten from economic woes. The hope for any relief in time of need, from the credit card regulations released by the Fed in December, have vanished, almost as soon as they began. No one can wait for a year-and-a-half. Credit card consumers need help now.
Although not without problems of their own, credit card lenders like Cap1, Citi and most of the others have felt compelled to continue raising APRs, as though no new regulations exist (for the foreseeable future they only exist on paper). The lenders are being pummeled on Wall Street for the unstoppable loses they must report every quarter. Talk of being taken over by the government (although it may be necessary) hasn't helped them much either. Huge credit card lenders like Chase are implementing diversive ways to get around the ‘rate hike' four-letter words by resorting to license to ‘do practically anything they want'. Although these powers have always been hidden in their original contracts, the need to exercise them has never been so glaring. In order to not have to raise APRs on accounts where they have committed not to, they are implementing a $120 per year fee in order for a consumer to continue with their ‘guaranteed' promise of low rates.
So, the Dodd bill is continually making ground as Congress attempts to come to the rescue of consumers. The main impetus is the urgency of the situation. In order to free up the ‘heart blockage', in our economy, we need to keep liquidity flowing in our nation's blood system. Bad as it is, our nation needs to continue spending even when our consumers have no money. Everyone agrees that this needs to be done judiciously and prudently. But, hammering on those who have done no wrong is not the way to recover from the losses caused by those who have. These losses, as they are, may have to be written off as ‘sunken costs' if credit card lenders can't find better innovations to recover from those who owe instead of asking those who don't owe to pay for them.
The counterbalance of concern must also provide the means for the credit card industry, itself, to survive. If the ‘tools' they have always relied upon for stability are instantly taken away, they must also be immediately be replaced with something else in order to survive.