New wrinkle to argument for CFPA

[tree]

On Wall Street Journal op-ed page Tues Feb 9, Elizabeth Warren, proponent of a Consumer Finance Protection Agency, says that "doing the right thing" costs banks/credit card companies under current system.


"The reputations of Wall Street's most storied institutions are evaporating as the lack of meaningful consumer rules has set off a race to the bottom to develop new ways to trick customers. Wall Street executives explain privately that they cannot get rid of fine print, deceptive pricing, and buried tricks unilaterally without losing market share.

"Citigroup learned this the hard way in 2007, when it decided to clean up its credit card just a little bit by eliminating universal default—the trick that allowed it to raise rates retroactively, even for consumers that did nothing wrong. Citi's reform resulted in lower revenues and no new customers, triggering an embarrassing public reversal.

"Citi explained sheepishly that credit cards were now so complicated that customers couldn't tell when a company offered something a little better. So Citi went back to something a little worse. Without a watchdog in place, the big banks just keep slinging out uglier and uglier products."

http://online.wsj.com/article/SB1000...LEFTTopOpinion

(subscription required; story about it on Huffington Post.)

[rjwjr]

Re: New wrinkle to argument for CFPA

"Citi explained sheepishly that credit cards were now so complicated that customers couldn't tell when a company offered something a little better. So Citi went back to something a little worse. Without a watchdog in place, the big banks just keep slinging out uglier and uglier products."

(subscription required; story about it on Huffington Post.)

Bull shit!

Now would be the perfect time for a renegade financial maverick to introduce an alternative credit card. It doesn't take a rocket scientist to see that a card offering a 10% rate could take a ton of market share, helps the populus, and creates quite a nice margin. Somehow, someway the financials oligarchs must be restricting this type of competition.

Wal-Mart should do it. They should offer 10% on purchases in their stores and 20% on outside purchases. That's still win-win vs today's 28-30% rates.

EJ should VC the idea.

[ThePythonicCow]

Re: New wrinkle to argument for CFPA

It doesn't take a rocket scientist to see that a card offering a 10% rate could take a ton of market share, helps the populus, and creates quite a nice margin.

USAA's Mastercard is currently at 8.9%. In the many years I've had it, they've never done any B.S. No messing with payment due dates to jack up penalties. No 0% cash advances (trying to trick you into usurious rates.) Just a fair market rate on the unpaid balance and excellent customer service.

[seanm123]

Re: New wrinkle to argument for CFPA

Bull shit!

Now would be the perfect time for a renegade financial maverick to introduce an alternative credit card. It doesn't take a rocket scientist to see that a card offering a 10% rate could take a ton of market share, helps the populus, and creates quite a nice margin. Somehow, someway the financials oligarchs must be restricting this type of competition.

Wal-Mart should do it. They should offer 10% on purchases in their stores and 20% on outside purchases. That's still win-win vs today's 28-30% rates.

EJ should VC the idea.

Last time Wal-Mart tried to become a bank there was a huge uproar down in DC, so Wal-Mart dropped their petition to the FDIC back in 2007. Current laws prohibit the mixing of banking and commerce, however there was a loophole, and before you knew Barney Frank and the rest of Congress threatened to pass a law that closed that loophole to keep Wal-Mart out of banking.

The FDIC and the lobbyists presented a nightmare scenario that the non-financial parent company borrows money from its FDIC insured bank (money which belongs to the banks depositors), and then defaults on the loan, breaking the bank, and leaving the FDIC on the hook for the depositors money.

Of-course here we are about three years later after all the bust and bailouts and bank closings and the FDIC is bust.

It does pay to have the best lobbyists money can buy down in DC, next to that however this time Walmart will have to try harder. Perhaps they should fund their own candidates based upon the recent Supreme Court decision in all Congressional districts coming up for election in November?