It has been two years, since the disastrous invasion by Israel into Lebanon. I spoke out forcefully against that folly at the time – See here and here and here and here and here as well as the comments at the end of each of my commentaries. Talk about “Déjà vu all over again” in the immortal words of Yogi Berra.
After the folly of the Lebanese invasion, which it was generally agreed was folly; an almost identical folly has now been committed. If you look at the comments you will see that very few agreed with me on Lebanon. There are few dissenting voices in the American community, and even less in the Jewish American community. But in Israel there are strong dissenting voices. See numerous opinion pieces in Haaretz entitled, “The Neighborhood Bully Strikes Again” and “Trying To 'Teach Hamas A Lesson' Is Fundamentally Wrong.”
That is a lot of reading, but with so many dying, so many wounded, so many made homeless, is it really too much to ask that a little time be spent reading other opinions.
We keep hearing, “Israel Has a Right to Defend Itself.” What we don’t hear is “Palestinians Have a Right to Defend Themselves.” We hear “Hamas has ended the truce.” Was there ever a truce on Israel’s side? It is well recognized that a blockade is an act of war. But during the six month of the so-called truce, Israel had a tight blockade applied against Gaza. No food, no medicine, no electricity was allowed into the territory, and Israel never ceased assassinating Hamas leaders.
As a Jew who knows what being a Jew means, not only in Nazi Austria, but at the hands of anti-Semitism in the US, I reject the notion so widely spread by the Israeli lobby, that to criticize Israel constitutes anti-Semitism.
They say that in the US Social Security is the third rail. In fact the third rail in the US is Israel and this is particularly true in the Jewish community. I maintain that criticism of dumb and immoral policies whether by the US, or by Israel, is the height of patriotism, or as Obama said in another context, "I am not against all wars, only dumb wars." When I spoke out against the madness of Lebanon, I was addressed as “Dear un- American Anti-Semite” in a comment here, but as Martin Luther King said, "Our lives begin to end the day we become silent about things that matter" and I will not be silent.
There are so many myths around the Israeli/Palestinian conflict. The biggest is “Jews good” “Arabs bad” ‘Muslims bad”.
I hear that Hamas refuses to recognize Israel. But Israel refuses to recognize Hamas. After all, as a result of pressure by the US, an election in the territories was held, and Hamas won the election and as a result became the duly elected representative of the people of the territories.
I hear that even in the West Bank children’s textbooks display a negative image of Israel. But Israeli textbooks refer to the territories as Judea and Samaria, clearly carrying the implication that Israel is negotiating in bad faith when it talks about a two state solution. And even a spokesperson for the Israeli foreign office talks about not the West Bank but about Judea and Samaria.
This is not calculated to instill trust.
After Hamas declared the truce at an end and fired some rockets into Israel not one Israeli was killed. The rockets were too inaccurate and the Israeli’s had good bomb shelters. That is not true the other way around.
The government of Israel says they try as hard as they can to avoid civilian casualties and that Hamas uses civilians as shields and so a thousand Palestinians have been killed and a multiple of that wounded and many, many more made homeless. There is a doctrine in the law called reckless endangerment. The concept says that if you recklessly endanger lives that is almost as bad as murder. Can anyone say that even if the IDF did not intend to kill civilians, there was not reckless endangerment?
When In our society a criminal take hostages, the police does not recklessly fire upon the criminal if it endangers the hostages. They will negotiate, they will wait, they will truly do all they can to avoid endangering the hostages. Can anyone say that is what the IDF has done?
And the use of cluster and phosphorous bombs. What can possibly justify these horrific weapons?
But even if we put all morality aside, what has all this carnage done for the security of Israel. According to an article in the New Yorker, Hamas had grown weak. Its support among Gazans was waning. It needed an Israeli strike to bolster its popularity. Israel has accommodated it.
What has it gained? Hate! Oh, there was hate there before, but there are degrees of hate.
Before 1967 Israel was in fact a besieged country. It faced the combined arms of all the surrounding Arab states and they were being armed by the Soviet Union. That is not the case any more. Peace treaties have been signed with Egypt and Jordan; there is no Soviet Union. Israel is the 80 pound gorilla in the Middle East. When a bee stings, the gorilla cannot go around destroying the whole jungle around it, because it is enraged.
Gideon Lichfield, the Jerusalem correspondent for The Economist writing in the NY Times from Tel Aviv said:
“Even if Israel now manages to impose a cease-fire on its terms, the calm will be short-lived unless it is willing to reoccupy much of the Gaza Strip indefinitely. Moreover, as long as Israel plays the role of aggressor in Palestinian eyes, Hamas’s support remains high. And each attack has weakened the relative moderates within Hamas and strengthened its most extremist leaders.
“Israel needs instead to abandon its military concept of deterrence in favor of a more pragmatic political one. What could deter Hamas is the fear that by using violence it will lose support among its people.
“How to create this? It is worth remembering that Israel launched its operation after the breakdown of a cease-fire that had held, reasonably well, for several months. Each side accused the other of breaching it, both with some justification. Instead of trying to re-establish the cease-fire, Israel’s leaders, driven by the need to bolster their ratings ahead of an election in February, decided to try to strike a decisive blow against Hamas.
“What Israel should do now is work for a cease-fire on terms that allow both sides to save some face. It should then do something it has done far too little of in the past: improve Gazans’ living conditions significantly. The aim should be to construct a long-lived state of calm in which Hamas has more to lose by breaching the cease-fire than by sticking to it.
“In the longer term Israel will have to accept that Hamas is no fringe movement that can be rooted out and destroyed, but a central part of Palestinian society. This will be the hard part, not least because of the opposition from Hamas’s secularist Palestinian rivals, Fatah.
“But even though Hamas’s stated goal is Israel’s destruction, it has said many times that it would accept a truce extending decades. Some former Israeli security chiefs argue that such an accommodation — a peace treaty in all but name — would eventually oblige Hamas to accept Israel’s existence, or else lose its own base of support. It is a gamble, certainly. But the alternative is more innocent lives lost, more extremism and ultimately more trouble for Israel.”
Even as I write this Israel has started withdrawing, having accomplished nothing except sowing destruction and hate.
What should Israel do? It should stop building illegal settlements on Arab lands. It may build walls to keep out terrorists, but on its own territory, not on occupied territory. It must not blockade Gaza. Gazans are entitled like any other people to come and go and to trade and to build a viable economy. Are there risks for Israel in this? Of course! But the alternative is worse. Israel instead of tearing down the Palestinian economy should build it. A prosperous Palestinian people tied to Israel by trade will not tolerate a Hamas in its midst, unless Hamas reforms. There will always be rejectionists, but they can be isolated, and without support they will wither.
The lessons of Vietnam and of Iraq have relevance.
Tuesday, January 20, 2009
Wednesday, January 14, 2009
Congress’ Response To The Credit Card Outrage
In my last post I discussed some of the outrages perpetrated on the American public by a banking industry that appears to specialize in predatory lending, and that because it can get exorbitant profits by lending without regard to credit-worthiness, takes on increasing risk by lending to people who can ill afford such loans. This was true in the mortgage crisis and it is equally true in the credit card business.
I discussed some of these practices, which result in borrowers paying fees and interest out of all proportion to their debt, charging what, in any context, are usurious rates worthy of the Mafia, and enticing people into becoming victims with teaser rates and minimal monthly payments. Needless, to say this started to cause an increasing number of defaults even before the mortgage crisis exploded.
The banks had an answer to this rising tide of default and it wasn’t by becoming more responsible lenders. Instead they decided that their victims must not be allowed the customary means of discharging their debt through bankruptcy protection, which is provided for in the US Constitution, Article I, Section 8 which says, that Congress shall be empowered “To establish … uniform laws on the subject of bankruptcies throughout the United States and by Title I of the US Code.
But in 2005 after many years of lobbying they pushed through an amendment to the bankruptcy act that made it much more difficult, if not impossible for people to discharge their debt. The late, great, Molly Ivens, who wrote for the Fort Worth Star-Telegram until 2001 and as an independent syndicated columnist until her death in 2007, wrote in various publications, including Creators Syndicate, and I quote in part:
“The bankruptcy bill was a gift to big bankers and credit card companies to begin with, in return for copious showers of campaign contributions to our very own elected representatives in Congress. Same old, same old…
“According to a study by two associate medical professors at Harvard, published in Health Affairs, bankruptcies are indeed shooting up. Between 1981 and 2001, personal bankruptcies rose by 360 percent, but those caused by medical debts rose an astronomical 2,200 percent. Only job loss now slightly leads medical crisis as the reason for bankruptcy -- it's ahead of divorce.
“Another cause, as well the usual usury, is that the card companies push accounts on people whose credit is only marginal -- your teenager has doubtlessly been offered several. Ooops, it turns out many of those with shaky credit can't pay (!), so of course the banks want the law changed even more in their favor. Poor little card companies -- only $30 billion in profits last year.
“Elizabeth Warren, a Harvard law professor, pointed out in testimony before Congress that the bill assumes everyone is in bankruptcy because they're spendthrifts. “ A family driven to bankruptcy by the increased cost of caring for an elderly parent with Alzheimer's disease is treated the same as someone who maxed out his credit cards at a casino. A person who had a heart attack is treated the same as someone who had a spending spree at the shopping mall. A mother who works two jobs and who cannot manage the prescription drugs needed for a child with diabetes is treated the same as someone who charged a bunch of credit cards with only a vague intent to repay."
In the House the bill passed with 229 Republicans and 73 Democrats voting for it. Not one Republican voted against it. Opposing it were 125 Democrats and one independent, Vermont's Bernard Sanders. In the Senate it passed by a vote of 74 to 25. Not one Republican voted against it. Sadly, 18 Democrats voted for it. Even more sadly, among them was our V-P elect, Sen. Biden of Delaware, where most of these banks are incorporated, and Sen. Reid of Nevada, the Democratic majority leader. President Bush promptly signed it into law. President elect Obama, who voted against it, has his work cut out to get anything decent out this coalition.
On the other hand, reform was attempted in March of 2008 when two bills aimed at protecting consumers, especially young consumers were introduced by Senator Menendez D-NJ, entitled the "Credit Card Reform Act of 2008" S2753 and Representative Maloney D-NY HR 5244. Although both bills have there own nuances, a look at the Senate’s version reveals that it has the following provisions:
-Consumers under the age of 21 would be allowed to choose whether to receive credit card solicitations. Cardvissuers could only solicit young consumers if they receive affirmative consent in advance.
-Card issuers could not use the widespread practice of charging higher interest rates on balances incurred before a rate increase went into effect.
-Credit card issuers could not alter credit card agreements while they are in force without specific written consent from the cardholder. This will stop issuers from giving themselves the right in cardholder agreements to increase interest rates and fees at any time, for any reason.
-The bill would require that penalty fees be reasonably related to the costs that credit card issuers incur because of a late or over-limit transgression.
-Credit card issuers could not increase a cardholder's interest rate based on adverse information relating to other creditors they find on the consumer's credit report.
-Card issuers would be required to limit penalty interest rate increases to 7 percent above the previous rate if a consumer fails, for instance, to make a payment on time.
-The Act would prohibit late fees on payments that have been postmarked by a designated date.
-The bill prevents issuers from offering credit or raising credit limits to consumers unless they determine that the consumer will actually be able to make the scheduled payments based on their current income, obligations, and employment status.
-The bill requires lenders to make a firm offer of credit that includes specific — not deceptively low — terms, including the interest rate, fees, and credit line.
It appears that the bill dealt with a serious problem.
It passed in the House by a vote of 312 to 112. 228 Democrats and 84 Republicans voted for it. 1 Democrat and 111 Republicans voted against it. It never got out of committee in the Senate.
Yes, we really NEED CHANGE WE CAN BELIEVE IN. I hope and pray that our new President and our new Congress can and will deliver it.
I discussed some of these practices, which result in borrowers paying fees and interest out of all proportion to their debt, charging what, in any context, are usurious rates worthy of the Mafia, and enticing people into becoming victims with teaser rates and minimal monthly payments. Needless, to say this started to cause an increasing number of defaults even before the mortgage crisis exploded.
The banks had an answer to this rising tide of default and it wasn’t by becoming more responsible lenders. Instead they decided that their victims must not be allowed the customary means of discharging their debt through bankruptcy protection, which is provided for in the US Constitution, Article I, Section 8 which says, that Congress shall be empowered “To establish … uniform laws on the subject of bankruptcies throughout the United States and by Title I of the US Code.
But in 2005 after many years of lobbying they pushed through an amendment to the bankruptcy act that made it much more difficult, if not impossible for people to discharge their debt. The late, great, Molly Ivens, who wrote for the Fort Worth Star-Telegram until 2001 and as an independent syndicated columnist until her death in 2007, wrote in various publications, including Creators Syndicate, and I quote in part:
“The bankruptcy bill was a gift to big bankers and credit card companies to begin with, in return for copious showers of campaign contributions to our very own elected representatives in Congress. Same old, same old…
“According to a study by two associate medical professors at Harvard, published in Health Affairs, bankruptcies are indeed shooting up. Between 1981 and 2001, personal bankruptcies rose by 360 percent, but those caused by medical debts rose an astronomical 2,200 percent. Only job loss now slightly leads medical crisis as the reason for bankruptcy -- it's ahead of divorce.
“Another cause, as well the usual usury, is that the card companies push accounts on people whose credit is only marginal -- your teenager has doubtlessly been offered several. Ooops, it turns out many of those with shaky credit can't pay (!), so of course the banks want the law changed even more in their favor. Poor little card companies -- only $30 billion in profits last year.
“Elizabeth Warren, a Harvard law professor, pointed out in testimony before Congress that the bill assumes everyone is in bankruptcy because they're spendthrifts. “ A family driven to bankruptcy by the increased cost of caring for an elderly parent with Alzheimer's disease is treated the same as someone who maxed out his credit cards at a casino. A person who had a heart attack is treated the same as someone who had a spending spree at the shopping mall. A mother who works two jobs and who cannot manage the prescription drugs needed for a child with diabetes is treated the same as someone who charged a bunch of credit cards with only a vague intent to repay."
In the House the bill passed with 229 Republicans and 73 Democrats voting for it. Not one Republican voted against it. Opposing it were 125 Democrats and one independent, Vermont's Bernard Sanders. In the Senate it passed by a vote of 74 to 25. Not one Republican voted against it. Sadly, 18 Democrats voted for it. Even more sadly, among them was our V-P elect, Sen. Biden of Delaware, where most of these banks are incorporated, and Sen. Reid of Nevada, the Democratic majority leader. President Bush promptly signed it into law. President elect Obama, who voted against it, has his work cut out to get anything decent out this coalition.
On the other hand, reform was attempted in March of 2008 when two bills aimed at protecting consumers, especially young consumers were introduced by Senator Menendez D-NJ, entitled the "Credit Card Reform Act of 2008" S2753 and Representative Maloney D-NY HR 5244. Although both bills have there own nuances, a look at the Senate’s version reveals that it has the following provisions:
-Consumers under the age of 21 would be allowed to choose whether to receive credit card solicitations. Cardvissuers could only solicit young consumers if they receive affirmative consent in advance.
-Card issuers could not use the widespread practice of charging higher interest rates on balances incurred before a rate increase went into effect.
-Credit card issuers could not alter credit card agreements while they are in force without specific written consent from the cardholder. This will stop issuers from giving themselves the right in cardholder agreements to increase interest rates and fees at any time, for any reason.
-The bill would require that penalty fees be reasonably related to the costs that credit card issuers incur because of a late or over-limit transgression.
-Credit card issuers could not increase a cardholder's interest rate based on adverse information relating to other creditors they find on the consumer's credit report.
-Card issuers would be required to limit penalty interest rate increases to 7 percent above the previous rate if a consumer fails, for instance, to make a payment on time.
-The Act would prohibit late fees on payments that have been postmarked by a designated date.
-The bill prevents issuers from offering credit or raising credit limits to consumers unless they determine that the consumer will actually be able to make the scheduled payments based on their current income, obligations, and employment status.
-The bill requires lenders to make a firm offer of credit that includes specific — not deceptively low — terms, including the interest rate, fees, and credit line.
It appears that the bill dealt with a serious problem.
It passed in the House by a vote of 312 to 112. 228 Democrats and 84 Republicans voted for it. 1 Democrat and 111 Republicans voted against it. It never got out of committee in the Senate.
Yes, we really NEED CHANGE WE CAN BELIEVE IN. I hope and pray that our new President and our new Congress can and will deliver it.
Monday, January 05, 2009
The Looming Credit Card Crisis
As we focus on the mortgage lending outrages, which turned into the mortgage-lending crisis, we are taking our eye off the credit card outrages, which are fast turning into a credit card crisis.
Even now as we hear about banks not wanting to lend, I am still getting numerous solicitations for “pre-approved’ credit cards, with teaser rates of 0%, offers of cash advances with blank checks enclosed, and invitations to transfer my debt from other banks. All I have to do is sign an agreement that sets forth the terms and conditions in multi-page small print documents, that I have neither the patience nor the time to read, and besides, even though I am a lawyer, am unable to comprehend. In addition the department stores, at the behest of the banks, offer me discounts or free shipping, etc., if I will just sign up to another credit card. (Just sign here to the terms and conditions.) The banks that issue these credit cards don’t care if the lenders have no income or have not nearly enough income to pay their debt. In fact they don’t want them to pay off their debt. They just want them to pay a “minimum amount” each month, which is a fraction of the debt, to keep them indebted and pay ever-increasing interest, and they want them to be late with a payment, because that triggers penalties and increases interest charges.
Kids in their teens get solicitations and are signed up without their parent’s knowledge or consent. Even though this had been going on for some time, awareness of it only really surfaced in 2006, even though identity theft seemed to make better copy. Thus in an article in the November 13,2006 issue of the New York Times, entitled “Identity Thief Is Often Found in Family Photo,” the Times wrote, “Mr. Wagenhauser’s former wife, Ivy Ash, began applying for credit cards in the children’s names soon after the divorce. She ran up about $200 in unpaid bills, he said, which grew to about $1,000 with late fees and interest penalties.”
I reacted instantly with a letter to the Times, which was not published, as follows:
However, I discovered later that the Times had in fact dealt with the issue, two years earlier, on November 21, 2004 with an article entitled, “Soaring Interest Compounds Credit Card Pain for Millions," where the article referred to an anecdotal incident, but typical of untold others.
When Ed Schwebel was whittling down his mound of credit card debt at an interest rate of 9.2 percent, the MBNA Corporation had a happy and profitable customer. But this summer... MBNA suddenly doubled the rate on his account.
Mr. Schwebel, 58, a semiretired software engineer in Gilbert, Ariz., was not pleased that his minimum monthly payment jumped from $502 in June to $895 in July. But what really made him angry, he said, was the sense that he was being punished despite having held up his end of the bargain with MBNA.
"I paid the bills the minute the envelope hit the desk," said Mr. Schwebel, who had accumulated $69,000 in debt over five years before the rate increase. "All of a sudden in July, they swapped it to 18 percent. No warning. No reason. It was like I was blindsided."
Then Rep. Sanders (Independent) Vermont (now a Senator) reacted with a Letter to the Editor, which said in part, “Last year, I offered an amendment in Congress to prohibit the credit-card interest rate bait and switch that received 142 votes. But it was defeated because of the enormous influence of the banking and credit card industry on Capitol Hill. The only way we will be successful in abolishing this predatory lending tactic is if American consumers fight back and make it very clear to their representatives that they want decisive action from Congress to end this modern-day loan-sharking.”
Mr. Schwebel in fact was lucky.
CNN Money, in an article dated December 17, 2008, reported the experience of one Owen Kusolpaisit, of Southhaven, Miss. who wrote to them, “I have a very small business and most of our debt is on credit cards. We had a 0% annual percentage rate until January 2009 that would go up to 7.99% thereafter. A few months ago my check got there a day late. The credit card company, Advanta, increased my APR to 7.99%. I just received my current statement and the APR jumped to 25.39%. When I called, a supervisor said it was done for economic reasons. How can they do that? Is it illegal? Can I report them?
CNN Money advised that it is perfectly legal.
In fact the Banking Industry successfully opposed a bill introduced by Senator Durbin, on July 17, 2008 to create a national usury law that would cap consumer credit rates at 36 percent. A 36% cap, which most would consider a Mafia rate, is opposed by the banking industry. How much more are they charging or want to charge? Sen. Durbin’s website explains his reasons for introducing the bill, “Within blocks of my home in Springfield, Illinois, there are payday lenders charging interest rates of two and three hundred percent of the value of the loan,” Durbin said. “These excessive rates are often hidden and can have crippling effects on those individuals who can afford it least. Congress must enact protections against predatory lending. America’s working families depend on it.” And he quotes the Chicago Tribune as having reported, “…the story of 66 year-old Rosa Mobley, who lives on Social Security and a small pension. Ms. Mobley took out a car title loan of $1,000 and was charged 300% interest. She wound up paying more than $4,000 over 28 months and is struggling to get by. Under Durbin’s legislation, the most Ms. Mobley would have paid was $60, in interest, per month or $1,680 for 28 months. As indicated the bill has not passed Congress.
In introducing his bill Senator Durbin pointed out that individual state usury laws are still on the books, but effectively have been rendered moot by a 1978 Supreme Court decision. That decision lets states "export" the law from the state where a credit card issuer is headquartered to apply to the rest of the country. As a result, credit card issuers placed their headquarters in states such as Delaware and South Dakota, which have no usury laws or very lax ones.
Hopefully, this is an opportunity to get Republican Evangelicals on board, for the image of Christ driving the moneylenders from the temple is one of the prominent images in Christianity.
In my next exposition I will address other bills on this subject, including ones that have compounded the problem, and ones that addressed the problem, but died in the last Congress, with heavy Republican opposition.
Even now as we hear about banks not wanting to lend, I am still getting numerous solicitations for “pre-approved’ credit cards, with teaser rates of 0%, offers of cash advances with blank checks enclosed, and invitations to transfer my debt from other banks. All I have to do is sign an agreement that sets forth the terms and conditions in multi-page small print documents, that I have neither the patience nor the time to read, and besides, even though I am a lawyer, am unable to comprehend. In addition the department stores, at the behest of the banks, offer me discounts or free shipping, etc., if I will just sign up to another credit card. (Just sign here to the terms and conditions.) The banks that issue these credit cards don’t care if the lenders have no income or have not nearly enough income to pay their debt. In fact they don’t want them to pay off their debt. They just want them to pay a “minimum amount” each month, which is a fraction of the debt, to keep them indebted and pay ever-increasing interest, and they want them to be late with a payment, because that triggers penalties and increases interest charges.
Kids in their teens get solicitations and are signed up without their parent’s knowledge or consent. Even though this had been going on for some time, awareness of it only really surfaced in 2006, even though identity theft seemed to make better copy. Thus in an article in the November 13,2006 issue of the New York Times, entitled “Identity Thief Is Often Found in Family Photo,” the Times wrote, “Mr. Wagenhauser’s former wife, Ivy Ash, began applying for credit cards in the children’s names soon after the divorce. She ran up about $200 in unpaid bills, he said, which grew to about $1,000 with late fees and interest penalties.”
I reacted instantly with a letter to the Times, which was not published, as follows:
Your article about identity theft (p.1, November 13) misses the mark. Your casual reference to a credit card debt of $200 having turned into one of $1,000 “with late fees and interest penalties” strikes me as far more shocking. This sounds more like Mafia loan sharking than what should be legal banking practice. Until our government puts a reasonable cap on interest rates and penalties, this kind of outrage continues to haunt the unsuspecting, naïve, and in many cases poor victims of this kind of banking outrage. It is to be hoped that the new Democratic Congress will make outlawing usury one of its top priorities.
However, I discovered later that the Times had in fact dealt with the issue, two years earlier, on November 21, 2004 with an article entitled, “Soaring Interest Compounds Credit Card Pain for Millions," where the article referred to an anecdotal incident, but typical of untold others.
When Ed Schwebel was whittling down his mound of credit card debt at an interest rate of 9.2 percent, the MBNA Corporation had a happy and profitable customer. But this summer... MBNA suddenly doubled the rate on his account.
Mr. Schwebel, 58, a semiretired software engineer in Gilbert, Ariz., was not pleased that his minimum monthly payment jumped from $502 in June to $895 in July. But what really made him angry, he said, was the sense that he was being punished despite having held up his end of the bargain with MBNA.
"I paid the bills the minute the envelope hit the desk," said Mr. Schwebel, who had accumulated $69,000 in debt over five years before the rate increase. "All of a sudden in July, they swapped it to 18 percent. No warning. No reason. It was like I was blindsided."
Then Rep. Sanders (Independent) Vermont (now a Senator) reacted with a Letter to the Editor, which said in part, “Last year, I offered an amendment in Congress to prohibit the credit-card interest rate bait and switch that received 142 votes. But it was defeated because of the enormous influence of the banking and credit card industry on Capitol Hill. The only way we will be successful in abolishing this predatory lending tactic is if American consumers fight back and make it very clear to their representatives that they want decisive action from Congress to end this modern-day loan-sharking.”
Mr. Schwebel in fact was lucky.
CNN Money, in an article dated December 17, 2008, reported the experience of one Owen Kusolpaisit, of Southhaven, Miss. who wrote to them, “I have a very small business and most of our debt is on credit cards. We had a 0% annual percentage rate until January 2009 that would go up to 7.99% thereafter. A few months ago my check got there a day late. The credit card company, Advanta, increased my APR to 7.99%. I just received my current statement and the APR jumped to 25.39%. When I called, a supervisor said it was done for economic reasons. How can they do that? Is it illegal? Can I report them?
CNN Money advised that it is perfectly legal.
In fact the Banking Industry successfully opposed a bill introduced by Senator Durbin, on July 17, 2008 to create a national usury law that would cap consumer credit rates at 36 percent. A 36% cap, which most would consider a Mafia rate, is opposed by the banking industry. How much more are they charging or want to charge? Sen. Durbin’s website explains his reasons for introducing the bill, “Within blocks of my home in Springfield, Illinois, there are payday lenders charging interest rates of two and three hundred percent of the value of the loan,” Durbin said. “These excessive rates are often hidden and can have crippling effects on those individuals who can afford it least. Congress must enact protections against predatory lending. America’s working families depend on it.” And he quotes the Chicago Tribune as having reported, “…the story of 66 year-old Rosa Mobley, who lives on Social Security and a small pension. Ms. Mobley took out a car title loan of $1,000 and was charged 300% interest. She wound up paying more than $4,000 over 28 months and is struggling to get by. Under Durbin’s legislation, the most Ms. Mobley would have paid was $60, in interest, per month or $1,680 for 28 months. As indicated the bill has not passed Congress.
In introducing his bill Senator Durbin pointed out that individual state usury laws are still on the books, but effectively have been rendered moot by a 1978 Supreme Court decision. That decision lets states "export" the law from the state where a credit card issuer is headquartered to apply to the rest of the country. As a result, credit card issuers placed their headquarters in states such as Delaware and South Dakota, which have no usury laws or very lax ones.
Hopefully, this is an opportunity to get Republican Evangelicals on board, for the image of Christ driving the moneylenders from the temple is one of the prominent images in Christianity.
In my next exposition I will address other bills on this subject, including ones that have compounded the problem, and ones that addressed the problem, but died in the last Congress, with heavy Republican opposition.
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