Frontline - Secret History of the Credit Card (2004)

[Rajiv]

The average American family today carries 10 credit cards. Credit card debt and personal bankruptcies are now at an all time high. With no legal limit on the amount of interest or fees that can be charged, credit cards have become the most profitable sector of the American banking industry: more than $30 billion in profits last year alone. FRONTLINE examines how the credit card industry became so pervasive, so lucrative, and so powerful.

57 minutes

[FRED]

Re: Frontline - Secret History of the Credit Card (2004)

The average American family today carries 10 credit cards. Credit card debt and personal bankruptcies are now at an all time high. With no legal limit on the amount of interest or fees that can be charged, credit cards have become the most profitable sector of the American banking industry: more than $30 billion in profits last year alone. FRONTLINE examines how the credit card industry became so pervasive, so lucrative, and so powerful.

57 minutes

Frontline is the only TV left worth watching. Thanks.

[Rajiv]

Re: Frontline - Secret History of the Credit Card (2004)

From ABC News "Obama Eyes Credit Card Clampdown - Democrat to Examine Stricter Regulation of Credit Card Interest Rates"

When Sen. Barack Obama, D-Ill., spoke about the credit crisis last week, he gave only a hint of the kind of reforms he might seek if elected president.

One of the more ambitious ideas he is considering, according to a campaign spokeswoman, would be to restore government regulation of credit card interest rates. The government has not been involved in interest rate regulation for 30 years, after a Supreme Court ruling blocked states from effectively engaging in the practice.

Obama would "examine ways to more strictly regulate interest rates, and believes such regulation should be done carefully to ensure that we do not harm consumers with unintended consequences," Obama spokeswoman Jen Psaki told ABC News.

Stricter regulation of interest rates would likely provoke a titanic struggle with the credit card industry, which would argue that the government should not meddle in the free market. But advocates of re-regulating interest rates argue that this change is needed to prevent more families from falling into bankruptcy.

As part of his "Change That Works for You" tour, Obama held a roundtable talk in Chicago last week with three consumers apparently gouged by the credit card industry. He was joined at the event by Harvard law professor Elizabeth Warren, the nation's leading advocate of re-regulating credit card interest rates.

"The key is that you need to break the cycle of no regulation," Warren told ABC News. "Currently, the states can't regulate and the federal government won't. So there are two ways to fix that: Either let the states do the regulating or put some regulation in at the federal level."

"Do one or do the other," she said, "because if you do neither, it's the Wild West out there."

See also The Coming Collapse of the Middle Class

[Slimprofits]

Re: Frontline - Secret History of the Credit Card (2004)

New England Cable News has video from the event at the Illinois Institute of Technology.

Obama says he would block credit card companies from raising interest rates without a borrower's approval. He also wants a federal credit card rating system and the elimination of interest rates being applied to late fees.

From the Obama campaign website:

• Create a Credit Card Rating System to Improve Disclosure: Obama will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card's features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.
• Establish a Credit Card Bill of Rights to Protect Consumers: Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:
  • Ban Unilateral Changes
  • Apply Interest Rate Increases Only to Future Debt
  • Prohibit Interest on Fees
  • Prohibit "Universal Defaults"
  • Require Prompt and Fair Crediting of Cardholder Payments

Interest Rates on Payday Loans and Improve Disclosure: Obama supports extending a 36 percent interest cap to all Americans. Obama will require lenders to provide clear and simplified information about loan fees, payments and penalties, which is why he'll require lenders to provide this information during the application process.

related, Ohio Secretary of State seeks comments on proposed changes to some "unfair credit card practices"

[Jim Nickerson]

Re: Frontline - Secret History of the Credit Card (2004)

New England Cable News has video from the event at the Illinois Institute of Technology.



From the Obama campaign website:

related, Ohio Secretary of State seeks comments on proposed changes to some "unfair credit card practices"

Capping credit card interest rates at 36%. Wow! Sounds like perpetuation of absolute bullshit to me. Disclosure: I have no credit card interest since 1967.

[Rajiv]

Re: Frontline - Secret History of the Credit Card (2004)

Capping credit card interest rates at 36%. Wow! Sounds like perpetuation of absolute bullshit to me.

Credit card reform requires that there be no payment grace period, and that fees and interest be charged from the date and time of credit card use -- That would be real reform!

Credit Cards should not be used as a substitute for money! It is a loan, and should be treatede as a loan!

[FRED]

Re: Frontline - Secret History of the Credit Card (2004)

Capping credit card interest rates at 36%. Wow! Sounds like perpetuation of absolute bullshit to me. Disclosure: I have no credit card interest since 1967.

We need to instate national usury laws. Period. Max credit card lending rate: LIBOR + 6%.

Sorry, bankers. Go get real jobs.

[metalman]

Re: Frontline - Secret History of the Credit Card (2004)

We need to instate national usury laws. Period. Max credit card lending rate: LIBOR + 6%.

Sorry, bankers. Go get real jobs.

what are the laws in other countries, i wonder... did a google search and found nuthin.

a cap was tried a long time ago but failed... fire econ interests got their claws into congress and it's been usury ever since...

Credit Card Rate Caps Draw Fire

By MICHAEL QUINT
Published: November 15, 1991
Bankers warned yesterday that a measure approved by the Senate to limit credit card interest rates to 14 percent would bring a sharp reduction in the availability of credit cards that would disrupt the economy.

Although the credit card business has been highly lucrative for several years, the bankers said the profit margin was not so great that they could afford to cut interest rates to 14 percent from the current average of 18 percent or 19 percent and still earn a profit.

"Our average member makes $1.90 for every $100 of card loans," said Alex W. Hart, president of Mastercard International. "If the interest rate is reduced to 14 percent, you take $5 from that profit, and the business becomes uneconomical" or a loss. Mastercard, like Visa, helps banks advertise credit cards and arranges for payments to merchants who accept the cards, but the cards themselves are issued by banks and savings institutions.

[Slimprofits]

Re: Frontline - Secret History of the Credit Card (2004)

Capping credit card interest rates at 36%. Wow! Sounds like perpetuation of absolute bullshit to me. Disclosure: I have no credit card interest since 1967.

Note that bit from Obama's website is about so-called payday loan rates, not credit card rates.

[Jim Nickerson]

Re: Frontline - Secret History of the Credit Card (2004)

Note that bit from Obama's website is about so-called payday loan rates, not credit card rates.

Anyway you name it, it is still unbelieveable bullshit.

[algerwetmore]

Re: Frontline - Secret History of the Credit Card (2004)

I get it. If consumers won't voluntarily save, then yank the credit cards away, until they save. Uncle Sam has taken away the advance on your monthly allowance, so get used to it.

[Slimprofits]

Re: Frontline - Secret History of the Credit Card (2004)

what are the laws in other countries, i wonder... did a google search and found nuthin.

Some information on laws in other countries can be found in the articles section here: European Coalition for Responsible Credit

[metalman]

Re: Frontline - Secret History of the Credit Card (2004)

Some information on laws in other countries can be found in the articles section here: European Coalition for Responsible Credit

cool. thanks.

[ax]

Re: Frontline - Secret History of the Credit Card (2004)

Anyway you name it, it is still unbelieveable bullshit.

Even the threat of this type of legislation would do wonders for my Capital One puts....kablooey time for their businesses.

[Scot]

Re: Frontline - Secret History of the Credit Card (2004)

Capping credit card interest rates at 36%. Wow! Sounds like perpetuation of absolute bullshit to me. Disclosure: I have no credit card interest since 1967.

Such high interest rates should tell you something about the rate of defaults for those with little or bad credit -- and how many people aren't getting their legs broken by loan-sharks.