Credit Card Crunch
Credit Card Crunch
The congress has inserted itself in to the private sector again in order to save us from our own laziness and stupidity. It has again gone after the evil banks for providing a service that we desire and is essential to the government’s economic recovery plan. According to both presidents Bush and Obama, we are supposed to go out and spend money in order to stimulate economic growth, encourage business production, create jobs and ultimately, more tax revenue. The problem is, fewer people have money to spend so the government says that we are to do what it does when the cupboards are bare-borrow. In this case, we are supposed to run up our credit cards, if we have not done so already. Forget the fact that this is unsustainable and was a major contributing factor for the mess we are in. Spend, borrow and spend!
The banks have a problem, however. During this downturn, many people are defaulting on their cards and the banks are being stuck with the bill. One has to remember that credit cards are designed for people who either cannot get other credit or have used up other available sources. That is why the interest rates are high, they are riskier loans on the part of the banks. As a whole, we have accepted these terms, voluntarily, for the convenience. Just like we may complain about ATM fees but pay them anyway because we are too lazy to go into the bank to get our own cash, we put up with the “unscrupulous” practices and usurious interest of credit cards for the convenience. Now that a larger percentage of people are defaulting, the banks have to recoup those costs and they do so by squeezing more out of those who have not yet defaulted. Sure, this is tough on the responsible people but they voluntarily entered into those agreements. If any of us decide we don’t like the interest rates or the changing terms, we can pay off the credit and not use it. If we can’t, we must live with our choice. Yes, there are negative consequences whether the results of those choices are paying high interest or putting up with the results of bad credit if we default.
Congress. however, is always looking out for us. They don’t think such practices are “fair” so they are going to prevent the banks from doing the things that will help them meet the bottom line. They want the banks to give credit because they need people to spend but they don’t want the banks to give that credit under circumstances that enable the bank to remain profitable or solvent. Just like they want a viable US auto industry but they won’t push for union concessions or allow them to make the cars that people want. Congress getting involved in any area of the private sector in these ways, intruding into the contractual agreements voluntarily entered into by business and consumer is never good. It will ruin the business and restrict the choices available for the consumer.
Congress, however, has a lot of nerve complaining about unscrupulous practices, bait and switch and the like, by these banks. What about President Obama saying he was going to have the most transparent administration, make available all bills for five days before they are signed and would allow no earmarks in congress’ spending bills? What about the voters in Pennsylvania who elected Republican Specter who has now switched parties? Considering the lies and incompetence constantly on display in congress, the banks look like choirboys in comparison. It is time we acted like responsible men and women and took our lumps when appropriate and told congress to get out of our business.
The congress has inserted itself in to the private sector again in order to save us from our own laziness and stupidity. It has again gone after the evil banks for providing a service that we desire and is essential to the government’s economic recovery plan. According to both presidents Bush and Obama, we are supposed to go out and spend money in order to stimulate economic growth, encourage business production, create jobs and ultimately, more tax revenue. The problem is, fewer people have money to spend so the government says that we are to do what it does when the cupboards are bare-borrow. In this case, we are supposed to run up our credit cards, if we have not done so already. Forget the fact that this is unsustainable and was a major contributing factor for the mess we are in. Spend, borrow and spend!
The banks have a problem, however. During this downturn, many people are defaulting on their cards and the banks are being stuck with the bill. One has to remember that credit cards are designed for people who either cannot get other credit or have used up other available sources. That is why the interest rates are high, they are riskier loans on the part of the banks. As a whole, we have accepted these terms, voluntarily, for the convenience. Just like we may complain about ATM fees but pay them anyway because we are too lazy to go into the bank to get our own cash, we put up with the “unscrupulous” practices and usurious interest of credit cards for the convenience. Now that a larger percentage of people are defaulting, the banks have to recoup those costs and they do so by squeezing more out of those who have not yet defaulted. Sure, this is tough on the responsible people but they voluntarily entered into those agreements. If any of us decide we don’t like the interest rates or the changing terms, we can pay off the credit and not use it. If we can’t, we must live with our choice. Yes, there are negative consequences whether the results of those choices are paying high interest or putting up with the results of bad credit if we default.
Congress. however, is always looking out for us. They don’t think such practices are “fair” so they are going to prevent the banks from doing the things that will help them meet the bottom line. They want the banks to give credit because they need people to spend but they don’t want the banks to give that credit under circumstances that enable the bank to remain profitable or solvent. Just like they want a viable US auto industry but they won’t push for union concessions or allow them to make the cars that people want. Congress getting involved in any area of the private sector in these ways, intruding into the contractual agreements voluntarily entered into by business and consumer is never good. It will ruin the business and restrict the choices available for the consumer.
Congress, however, has a lot of nerve complaining about unscrupulous practices, bait and switch and the like, by these banks. What about President Obama saying he was going to have the most transparent administration, make available all bills for five days before they are signed and would allow no earmarks in congress’ spending bills? What about the voters in Pennsylvania who elected Republican Specter who has now switched parties? Considering the lies and incompetence constantly on display in congress, the banks look like choirboys in comparison. It is time we acted like responsible men and women and took our lumps when appropriate and told congress to get out of our business.
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