Ha Ha, Part 2

big business as usual, collapse, economy December 24th, 2007

A few weeks ago, we learned that thanks to the bankruptcy Bill of 2005, written by and for the banking and credit industry, more people are defaulting on their mortgages while keeping current with their credit cards. There was much mirht:

Washington Mutual, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. spent $25 million in 2004 and 2005 lobbying for a legislative agenda that included changes in bankruptcy laws to protect credit card profits, according to the Center for Responsive Politics, a non-partisan Washington group that tracks political donations.

The banks are still paying for that decision. The surge in foreclosures has cut the value of securities backed by mortgages and led to more than $40 billion of writedowns for U.S. financial institutions. It also reached to the top echelons of the financial services
industry.

Well now it’s time for HA HA part 2, because people can’t afford their credit card debt either. And here’s why:

His credit card struggles began nine years ago, when he charged his son’s college tuition and books. He thought he was being clever: His credit card’s 6 percent “teaser” interest rate was lower than the 8.6 percent interest on a college loan.

McGuinness, 61, soon began using Citibank and Chase cards for food, dental work and copays on doctor visits and minor surgeries. Interest rates surged to 30 percent. Now he’s $37,000 in debt and plans to file for bankruptcy in February.

There’s a LOT of fine print in those credit card agreements: one of them is that they can change the statement date whenever they want, which can lead people to inadvertently miss a payment, which entails finance charges and rapid spikes in interest. That’s what happened to me a few years ago, and I have been paying for it ever since. [Incidentally, that's why my housmate's failure to pay her rent is so problematic: I have direct withdrawal, which I set up specifically to pay off a festering $700 sore at $100/month on a 0% card that jumps to at least 18% in November 2008, or sooner if I miss a payment. Payment's not due until the 28th of December, but they can change that date without warning...]

So here’s another fat HA HA to the banking industry. You thought you were too clever by half, and now your profits go bye-bye.

nelson muntz

Couldn’t have happened to a more deserving industry.

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