Senate to vote on state usury limits

Senate to vote on state usury limits

www.reuters.com

The Senate on Wednesday will vote on a measure that would allow states to limit credit-card interest rates, Democratic Senator Christopher Dodd said.

(visit the link for the full news article)

This is a very important vote. Currently states were denied the ability to regulate rates on credit card interest that originated elsewhere but affected residents of their state in punitive interest, flexible rates for past due balances that often included late fees added to the balance before the new interest was calculated.

Credit cards are easy signature loans that foster short term growth at the expense of the consumer. While it is nice to be able to buy a new TV or other home furnishings by monthly payments without entering a bank to apply for a traditional signature loan. The added expense to the consumer by increased prices for merchandise by retailers to cover the transaction fees from the credit card companies has always been the biggest disadvantage for the consumer.

Those transaction fees can range from 1.85%-6.0% plus 35-60 cents for each transaction depending on the arrangement. And with the individual cardholder having little protection from how monthly transactions are calculated and rates increased on carried balances, many card issuers have become legal loan sharks at rates that would make the old mafia loan sharks blush.

www.reuters.com
(visit the link for the full news article)

The real question is - "will it fly?"

Banks have been profiteering over the credit card scheme for five or 6 decades now...

How likely is it that they will 'accept' this legislation considering it imposes interest policy on their commerce.

The Fed will certainly resist if not outright "FORBID" this mandate since it interferes with their monopoly on monetary policy.... don't you think?

reply to post by Maxmars


It was speculated in the article that the 60 votes for passage will be hard to obtain. But that said, states have had to perform many bankruptcies over the years. Credit card debt is one of the things that become excused in bankruptcies. So much in fact that in 2005, bankruptcy lawswere changed to protect credit card issuers.

And from that article

This time around, House Republican leaders refused to consider amendments on the floor and voted down a Democratic attempt to return the bill to committee. The amendments would have forced lenders to keep fees in check, expand disclosure, and would have given extra protection to victims of identity theft.

Ultimately, there needs to be consumer protection from the lenders. With the bank bailouts, the people need a viable and tangible return to keep banks in check in order to prevent further bailouts and situations like The Savings and Loans Crisis--which incidentally doesn't read too differently than what caused the collapse in 2008 except being legitimate banks using bundled CDS as hedged instruments of value in order to make more loans.

In fact, I have wondered just how many of those Credit Defaults are leftover from the S&L days. My gut tells me that quite a few were, especially the ones that came from or were held by Freddie and Fannie when it all started unraveling.

I think this is a great idea
and should be passed.

For once, the Gov is keeping
banks from screwing over the
consumer by capping the interest
rate charged.

However, I don't foresee that this will
lower ur credit card bills. Cuz they will
always add some other fee or tax or
other charge to make up the difference
in the interest rate they want to charge.

In other words, the banks will just bypass
this to take ur money anyway.

reply to post by boondock-saint


Or it could lead to cards not being issued in "rate unfriendly" states. The argument from the card companies has always been that the rates were to cover their losses and expense of floating such loans. But given the income of the merchant transaction fees, late fees and even the standard rates.

Personally, I would like to see credit cards disappear and for banks to go back to signature loans for purchases less than $5000 on 24-36 month terms. For the consumer it would stop impulse buying of items they can not afford. And for banks, it would increase their overall value to customers while solidifying the bottom line.

Some banks will be more open to lending than others and they will succeed or fail depending on that market. With increased lending for minor purchases, loans for business start-ups and other types will become easier to obtain.

Part of the American way is to one's self up by the bootstraps. I think it is long overdue for legislation to provide that bootstrap instead of the safety net cost prohibitive social programs that do little for the recipients to recover.

This bill is a step in the right direction. Next one I'd like to see is to remove credit scores from being a determining factor in various unrelated things such as insurance premiums and pre-employment screening.

Limit?

Usury is or was forbidden by most religions.

www.ansarfinance.com...

Find the Usury Law in your state

www.usurylaw.com...