May 20, 2009

Another View Of The Credit Card Legislation

Talk about rewarding bad behavior. From the NYT via HotAir: Responsible credit-card users to “subsidize” deadbeats now.
Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”…
The industry says that the proposals will force banks to issue fewer credit cards at greater cost to the current cardholders.You. Have. Got. To. Be. Kidding. Me. Uh - isn't this going to basically be the death of the credit card industry? I mean, the only reason I have a credit card is for the goodies and convenience. I rack up frequent flyer miles and get cash back at the end of the year. I don't have any revolving credit card debt and therefore pay no finance charges or fees. Should the credit card companies try to charge me immediate interest or an annual fee, I will cancel the cards and just go with the debit card which is just as convenient to use. It's that simple. I will go Galt on the credit card companies. I dare say I won't be the only one either.It used to be that personal responsibility was treasured in this country, even by the government. In these days, that virtue is on its head as it appears that personal irresponsibility is held to a higher stand. Why the redistribution? Well, who do you think vote for Obama? The deadbeats or the responsible cardholders? In fact, since statistics will likely show racial disparities (it's more a function of income, but the party of identity politics always gets race involved) between deadbeats and those responsible, couldn't this be viewed as a form of reparations as well? HotAir adds:
Just a little friendly congressional intervention in the marketplace to shift risk from people who can’t afford the product to people who can. Hey — it worked out with mortgages, didn’t it? You’re already helping to pay off deadbeats’ homes. Why not help free them up to rack up some more credit-card debt too? This is simply a horrible idea foisted upon us at the worst possible time. It's rather funny how the Democrats turn a blind eye to responsible. Case-in-point is this quote in the Detroit News on the topic:
"Today is a victory for all credit cardholders," said Rep. Carolyn Maloney, D-N.Y., who had sponsored a similar measure that passed the House earlier this month. "All" cardholders. I guess it depends on what the definition of "all" is... More on this topic over at Memorandum.
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