Wednesday's Washington Post discusses Senate legislation aimed at loosening credit card debt rules for those in bankruptcy. Not surprisingly, banks oppose the legislation :
But in a letter to the subcommittee, the American Bankers Association opposed the measure. If the bill passes, "the market response would simply be to restrict credit, raise interest rates and fees or both," wrote Kenneth J. Clayton, senior vice president and general counsel of the organization's Card Policy Council. "This would significantly hurt tens of millions of Americans at the very time they can least afford it."
David C. John, senior research fellow at the Heritage Foundation, agreed.
Good lenders "will raise credit standards so fewer and fewer people will qualify for those credit products," he told the panel, adding that such people will be forced to do business with disreputable lenders that charge even higher interest rates.
Now, philosophically, I tend to agree with the point that the banks (and Mr. John from Heritage) make. However, the basic foundation of the banks's argument is the same as the argument the banks made back in September when they were demanding help from the federal government. It's the "give-me-the-money-or-I-shoot-the-dog" method of persuasion.
To wit: In September, it's "Give us billions or we won't lend any money to anyone; small business won't make payroll; consumer credit will dry up -- and the entire economy will shrivel. Better help us out -- or else!!!"
The current argument, "Don't give these whiny consumers a break or we won't lend any money to these deadbeats -- or anyone with possibly tight creditl; they'll be forced to go to less-reputable places, leading to bankruptcy -- the entire economy will shrivel. Better help us out -- or else!!!"
Hope the banks understand why everyone hates 'em.
What's in your wallet?
Between what the feds are taking to pay to the banks -- and what I'm paying to the banks, personally -- not a damn thing.