Wednesday, October 05, 2005

Thievery and deceit... Priceless

A great article about the upcoming Bankruptcy Abuse Prevention and Consumer Protection Act (S.256), discusses why this bill is a national tragedy, not to mention what it says about our leaders in Washington - our leaders who are apparently worried that Visa and American Express are being hurt by consumer and small business bankruptcies.

Hmmm... Let's look at how they're doing now.

Visa USA's 2004 Annual Report claims a net income of $200 million for 2004. That's $200 million profit. And that's just Visa. Add into that Master Card, Discover and American Express and, well, you get the picture.

What exactly are we protecting here? A profit margin for a corporation? And in doing so we're sacrificing the very lives and existence of those in the middle class who fall unexpectedly on extreme times. And our elected officials are okay with this?

Is this the foundation of our nation's Congress?

Well, let's look at one very important factoid: 40% of current Senators are millionaires, as are 30% of our Congressmen. Compare that with the US population where only 3.5% of US households have assets of more than $1 million and it's not such a stretch to see where financial loyalties are drifting.

But if bankruptcy is such a problem, what is the root cause for the over-extended credit community that is today the United States. Who is to blame? According to Congress it's the irresponsible average citizen-consumer.

In most con games, bait & switch schemes, and consumer fraud practices it is the purveyor of the deceit who is at fault, not the unwitting consumer. Even home mortgage lenders have assumed risk when offering a mortgage. That's why the process of getting a mortgage is not easy, has limits and has protections (like mortgage insurance) built in.

But not so with consumer credit companies, including banks, who deluge consumers with a never-ending barrage of "free" offers and credit "deals" enticing even people with "bad credit" to keep charging ahead - or to start charging again. Then, once a person is "hooked", woe is them if they should be even 10 days late with a payment - then watch that "fixed" 7.9% interest rate jump to an astonishing 28.9% - a rate that would make any loan shark proud.

And that's exactly what these lenders are - loan sharks. No better than drug dealers who give a sample away for free and then hook their users into a spiral of addiction from which it becomes impossible to break free. By the time you're in over your head you have tens of thousands of dollars of debt at a 28% rate that's adding hundreds of dollars of new debt every month. There is no escape.

How effective is the game? In December of 2004, Visa says its cards accounted for 14 percent of the nation's personal consumption. That, simply, is frightening.

Sure, the individual consumer is to blame for a lot of this - heck I've put myself in the same situation. But it wouldn't have been possible without the constant mailbox stalking I endure - I receive at a minimum three new credit card offers every week. And it certainly wouldn't be as bad if the credit companies weren't imposing the types of rates that frankly should be illegal.

And in my opinion 28.9% should be illegal for a revolving credit account. Yes American Express I'm talking to you and your Delta Sky Miles card which should be renamed Vinnie's Lending Card!

Credit card companies, and banks especially, have a responsibility to be good community citizens. Coaxing and deceiving people into debt is NOT being responsible, and as such they should have to bear their share of the burden.

But not in America today - where corporations are exempt from ethical and community standards, all in the name of profits and investor return. If a bank has sought me out, nagging and begging me to try their card, and then I turn out to be a poor customer - who should pay the bill?

I didn't ask for it. But now, I get to pay for it. And if I can't, as of October 17th, the credit company will have even less responsibility and I'll no longer be able break away or start my life over.

It appears the financial drug dealers have won. At what point will we fight to take the streets back?



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