Tags: obama | credit | card | reform

Obama's Credit Card Reform Is a Fraud

Friday, 22 May 2009 03:35 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

The widely heralded credit card reform legislation making its way through Congress is a sellout to the credit card companies.

President Obama has proposed and Congress has passed a series of minor reforms that deal with the fringes of the problem — late billings, retroactive interest rate hikes, misapplication of payments and such — but fail to reform the most basic offense of the companies: their usury.

Congress explicitly rejected any limitation on the interest rate credit card companies can charge. It remains perfectly legal for them to charge rates that would make a loan shark blush.

In our book "Fleeced," we explain how credit card interest was subject to usury limits of the various states until 1979. But the Supreme Court emasculated these limits by ruling that the state of the lender, not of the borrower, had the sole power to legislate interest rate limits.

South Dakota swiftly jumped into the void the court created, eliminating any usury limits. All the credit card companies moved there and took advantage of the regulatory vacuum to hike their rates to unconscionable levels.

Competition can do nothing to force down rates because a handful of companies issues 90 percent of the credit cards. And states are paralyzed when it comes to regulating rates.

It is up to Congress to act. Yet the credit card companies' massive campaign donations succeeded in buying off enough Democrats and virtually all the Republicans to kill any limits on interest rates. So companies can continue to charge basic rates of 18 percent and then up to 30 percent as punishment for minor offenses like being a few days late in making payments.

But Obama and his Democratic allies are loudly proclaiming their success in fighting for the consumer despite their failure to use their majorities to afford any real protection form usurious interest rates.

Congress should have legislated a ceiling on regular interest rates, limiting them to five points above prime and on punitive rates requiring them to be no more than 10 points above prime. But Obama and the Democrats (and, of course, the Republicans) caved into the special interests and left out any interest rate controls.

The high rates credit card companies charge obviously do a great deal to impede consumer spending and drive families into bankruptcy. The average credit card balance for those who have such debt is more than $13,000. A 30 percent interest rate means more than $300 per month in interest payments alone!

It is cruel to see Obama offering the illusion of hope for credit card victims while denying them real relief.

© Dick Morris & Eileen McGann

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Dick Morris: Democrats Conspiring to Rig Electoral College, Law Passed in 9 States So Far

Tuesday, 15 Apr 2014 09:26 AM

A plan, now stealthily making its way through state legislatures with astonishing speed, would junk the Electoral Colleg . . .

Dodd-Frank Act Has Not Reformed Wall Street

Tuesday, 09 Aug 2011 14:53 PM

July 21 marked the anniversary of the passing of the Dodd Frank Wall Street Reform and Consumer Protection act. Unfortun . . .

Obama's Legacy: Stagflation

Friday, 04 Mar 2011 16:49 PM

Obama's failure to support America's allies in the Middle East and his dithering endorsement of chaos in the region will . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved