Allyson Schwartz: Not So True
Congress is getting serious about trying to jump-start the sluggish economy, and has been working overtime on a short-term stimulus plan. It’s an unusually bipartisan deal that could include checks of up to $600 per person sent out to 117 million households.
At the table during these negotiations has been U.S. Rep. Allyson Schwartz, who represents Northeast Philly and the inner suburbs of Montgomery County.
In just her second term, Schwartz, 59, has already earned two money slots — on the House Budget Committee and the Committee on Ways and Means. In an interview with City Paper conducted a day before she took off for a tour of Iraq, Schwartz said it has been tricky to come up with economic fixes that are palatable to both Democrats and Republicans. Congress needs to move fast to make a difference, she noted, but said that it must also come up with a policy that President Bush won’t veto.
The article goes on to detail all the ways in which Rep. Schwartz has been a boon to Pennsylvania. However, for those of us who have been paying attention, Allyson Schwartz has been a GRAVE disappointment, and nowhere has that disappointment been worse than in her record of standing up for the interests of the banking and credit card industries over consumers (and for that matter common sense). So I wrote Paul a letter.
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Dear Paul:
I have to take strong exception to your article about Allyson Schwartz, and have written to the City Paper detailing my objections. That’s because, despite your glowing profile, Rep. Schwartz is one of the reasons that consumers are in so much trouble, and the proposed “stimulus” the House and the White House agreed upon will do nothing to fix the underlying problem.
Consumers are not spending simply due to a lack of money: we aren’t spending because all of our money is already accounted for by the credit card companies.
In 2005, Rep. Schwartz voted in favor of the Orwellian-named Bankruptcy Reform and Consumer Protection Act of 2005: this act not only made it extremely difficult for individuals to declare bankruptcy protection from credit card debt, but also allowed the credit card companies to charge ANY INTEREST RATE THEY LIKE. We’re talking rates up to an including 25% or more. When you have a rate that high, and the credit card companies can jack your rates for whatever reason and without warning (Real Audio file, thanks to Pine View Farm for the link), it is impossible to pay off any balance larger than $100.00 or so: it becomes a vicious cycle of finance fees and interest payments that never seem to touch the principal.
This was an anti-consumer, anti-middle class vote by Schwartz: with the good blue- and white-collar jobs shipped off to Mexico, China, and India over the past 20 years, more and more middle class and working class people have had to depend on their credit cards to stretch their shrinking paychecks. By allowing the credit cards companies to charge interest rates formerly described as “usury”, Schwartz guaranteed that her constituents would be trapped in an endless cycle of debt.
While the banks were singing “Happy Days Are Here Again” with their allies in Congress as they bled American consumers dry, a funny thing happened that no one was counting on: a housing downturn. The banks got what they wanted, but there was an unintended consequence: instead of walking away from credit card debt, people began walking away from their mortgages. That was a real “uh-oh Spaghettios” moment.
In the past, if a household in America experienced financial problems it tended to go delinquent on its credit cards, but kept on paying its mortgage,” says Malcolm Knight, head of the Bank for International Settlements, the central banks’ bank. “Now what seems to be happening is that people who have outstanding mortgages that are greater than the value of their home, or have negative amortisation mortgages, keep paying off their credit card balances but hand in the keys to their house … these reactions to financial stress are not taken into account in the credit scoring models that are used to value residential mortgage-backed securities.”
One possible explanation is that it has become culturally more acceptable this decade for people to abandon houses or stop paying in the hope of renegotiating their home loans. The shame that used to be associated with losing a house may, in other words, be ebbing away – particularly among homeowners who took out subprime loans in recent years, as underwriting standards were loosened. Consumers may also be rationally re-evaluating the costs that come with defaulting on different forms of debt, in the light of recent bankruptcy law reforms in America.”
This is also echoed by recent statements by Wachovia and Bank of America. I ask you Paul, which is worse: thousands of consumers walking away from an average debt of $8,000, or thousands walking away from an average debt of $300,000 (the average price of a home in 2007, warning pdf)?
Of course, it’s not surprising that Allyson Schwartz would be representing the interests of the Banking Industry (and trying to hide that support through fawning profiles like the one published in the City Paper). Although you don’t mention it in your article the so-called “New Democrats” are well-known for their ties to Big Business and their willingness to run interference on behalf of corporations and their profit-making, usually at the expense of consumers and the middle class.
Schwartz’s support for the stimulus-package-that-isn’t ignores the real reasons why Americans aren’t buying, and imagines that a pittance of $300-$600 will be dumped back into the economy. It won’t: that piddling amount will be used to pay down some of our debts, or maybe buy less than 100 gallons of fuel oil (she also voted in 2007 to give Bush a blank check for more war in Iraq, intimately linked to the skyrocketing price of oil).
If Allyson Schwartz was serious about helping consumers, she would be working to repeal the Bankruptcy Reform bill she foolishly supported in 2005, or at the very least the provisions that keep people enslaved to credit card debt.
Since you know the Congresswoman, perhaps you will share this letter with her.
Sincerely,
Brendan Skwire
One Response to “Allyson Schwartz: Not So True”
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February 1st, 2008 at 7:45 pm
Check out this edition of Radio Times about hidden fees. The travel and cell phone companies get the worst review, but credit cards are not far behind.
http://www.whyy.org/rameta/RT/2008/RT20080131_20_2.ram (Real Audio)