Credit Scam Reform

Here is some of that change I remember hearing so much about.

Obama signs sweeping credit card reform bill | Reuters

U.S. President Barack Obama signed into law on Friday sweeping reforms that restrict credit card interest rates and fees, marking a victory for Democrats trying to help recession-weary consumers.

Let's tear this article apart. Yes, the whole damn thing.

But the law is expected to hurt profits of major card issuers such as Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and Capital One Financial Corp.

Boo-fucking-hoo.

Banks say the changes may cut the flow of credit to consumers because it will make it more difficult for issuers to set rates based on the risk their customers pose.

It means credit card companies may have to actually look at their clients ability to pay rather than just throwing everyone a bunch of cards and jacking up the rates. What a fucking shame.

"With this bill we are putting in place some common sense reforms designed to protect consumers," Obama said at a signing ceremony at the White House.

Not to sound libertarian, but these reforms wouldn't have been necessary had credit card issuers operated in a free market rather than a free-for-all market. If they had been truly concerned with the well being of their company they would have focused on developing a business relationship with their clients that focused on repeat business. Instead they focused on fleecing one victim and then moving on to the next. Eventually you either run out of victims or you have a (debt) slave uprising.

"We're not going to be giving 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," he said.

If they truly mean this, we should all be very afraid. The average Americans I interact with seem to aspire to one day striking it rich with a lottery win and never working another day in their lives.

Enactment marks the crest of a backlash against the card industry after years of rate and fee hikes and aggressive marketing programs that have angered consumers, analysts said.

Bread and circuses. If the people yell loud enough the government will give them what they ask for. Often they will give it to them good and hard.

It also represents the first major financial regulation reform completed by Obama as he tackles a rewrite of the rules of banking and the markets to better protect consumers and investors, and prevent another credit crisis.

In the current US economic system, the average person will only come out ahead on two types of debt: home and college loans. If you buy a home, get a reasonable mortgage, and stay in that place for fifteen years, the odds are in your favor. And if you get student loans and attain a four year degree, you will have a higher earning potential that will make those college loans a wise investment.

Of course if you can pay cash for school and home, you'll be even better off.

Addendum: For those who can't get enough internet video, here's the New York Times explaining the contents of the bill. It says, "New York Times columnist Ron Lieber finds that there is some cause for concern in the sweeping credit card legislation that passed the Senate on Tuesday." With the eight points he covers, only one seems to really raise his ire. The one that makes the companies send your bill 21 days before it is due instead of 14. Maybe the 'fine print' clause, too.