Naked Class Warfare

The next time you hear some pampered conservative fat cat (like, oh, Cal Thomas)  moaning about this topic, remember this: banks and credit card companies who aggressively court the young, undisciplined, and financially unsophisticated into signing up for credit cards they don't need, then whine to the president (oh, and give him money) when they're left to absorb the responsibility for their actions, won a great battle in just this kind of warfare yesterday.

Lenders such as credit card companies and retailers have lobbied for the bankruptcy changes for years, arguing it is too easy for people to game the system and walk away from debt.

With the White House and Congress in the banking industry's pocket, GOP proponents like Charles Grassley stating outright that the bill is aimed at "deadbeats," a dearth of visible, organized efforts against the law, and the fact that those most affected are too busy living their lives and working two jobs and therefore didn't have time to devote to lobbying, those on the side opposite of Cal Thomas never stood a chance.

I got to hand it to them, though, for all their lack of education, spare time, and financial finesse, these deadbeats really now how to outsmart lenders. You'd think these banks and retailers would have the means to keep unqualified customers from getting credit. But those sneaky deadbeats always find a way.

Here's how a typical case of "abuse" of  a lender works: First, the deadbeat opens their mailbox, the dog, where  dozens of credit card offers a year fall into their hand. In "need" of baby formula, diapers, food, and other reckless extravagances, they take these banks up on their offer. They're pre-approved after all. Then they really go to work.  They get cancer, wives nag their husbands into leaving them, they have an auto accident that leaves them disabled; they cook up some really good scams  (see, nearly 90 percent of bankruptcies are filed because of illness, disability,   job loss, family death, and divorce, according to the National Consumer Law Center). Then Citibank's left holding the bag. oh bahahahahahahahaahaha....boy they really got 'em good. It's the perfect score. No doubt these deadbeats have a healthy porfolio of BankAmerica stock, so they're looking to any way they can to force the competitor's stock to tank.

You'll have to excuse my excessive sarcasm; this GOP and industry doubletalk gets the better of me.  Does the bill provide for mandatory credit and financial education in high schools? Does it do anything to discourage the predatory (and sometimes, deceptive) practices of these lenders? Hell no. It rewards it.

It's obvious that the enemies of Bush & Co in this case are the Express Oil Change employee and his wife the Shoney's waitress--raising children, taking care of her mother, paying off some old medical bills--who, trying to get by, get in over their head. Yes, they might have a satellite dish on top of their mobile home, but they're not the cause of this problem. Among others, these people are.

When a bank dresses up their offers to make them more alluring, makes overtures they know will be tempting, then finds themselves dealing with unexpected consequences, they're "abused". When a woman does it, she was asking for it.

UPDATE: A group of 90 quixotic law professors, in a letter to Senators, take this bill to task with a cooler head and better precision than I can here.

Comments

[Frank Myers]

But aren't the Democratic talking heads rich fat cats too?

[Susan Elisabeth Roberts]

Hey Frank: Long time no read.

Of course they are. None richer (or, perhaps, fatter) than Ted Kennedy, but by and large they are opposing this legislation.

However, as you point out, though, 18 Democrats, along with independent Jim Jeffords, crossed over and voted for this. I don't know why. But it was still a GOP initiative. The ABC story says the law is the "second item on a White House legislative agenda to overhaul the legal system."

[Del]

Thanks for posting the lawyers' letter, Susan; unfortunately, a clearer understanding of the whole situation only made me feel more angry and helpless. I am filled with a childish desire to fill out ALL the credit card forms that come in the mail daily with silly answers and mail them back, in the hopes that processing these dead ends will cause some small financial drain on the companies.

The letter's last paragraph mentioned that the bill includes restraints on predatory lending. Getting rid of the horrible "Pawn the Title, Keep the Car" joints in our town would be great, but I'm wondering if those will somehow be the only provisions that are actually removed before the bill becomes law.

On the other hand, it does give one a certain frisson of schadenfreude to picture the red states teeming with folks struggling to keep the lights turned on, yanking their kids from Light of Faith Academy to enroll them in the crappy public schools they refused to fund, etc...knowing that so many of these people voted for Bush.

[Kathy]

We just got a letter from a creditor telling us our credit limit with one particular store (big home improvement purchase that's supposed to be no credit/interest for 12 months, which is the only reason we financed through the store) is being lowered because of excessive inquiries for our credit report. I wonder how many of those queries come from the credit card companies who continue to flood our mailbox with pre-approved cards even though we have never responded to them.

Del, one friend told me that her dad takes the offers from one company and puts them in the postage paid reply envelope from another and then mails them back to the wrong people. He's been taken off most of the lists b/c it's too expensive for them to process the mail. It might be worth a try :)

[Susan Elisabeth Roberts]

Hey Del:

Well, Here's how the bill looked when it was introduced. The "consumer protections" look to me like common-sense givens thrown in so the Democrats who crossed over and voted for this could sleep at night.

One provision, for example, says that debt relief agencies can't:

"make any statement, or counsel or advise any assisted person or prospective assisted person to make a statement in a document filed in a case or proceeding under this title, that is untrue and misleading, or that upon the exercise of reasonable care, should have been known by such agency to be untrue or misleading"

so, basically, they can't lie or encourage the deadbeats to lie (this is one example only. Here is the specific section on "consumer protection").

The law professors acknowledged these 'protections' in their letter as a show of honesty and good faith, I believe (having spent the previous 10 pages deconstructing the law, they had to end with some effort at concilation). But this Congress, this White House, is not serious about clamping down on predatory lending, and until poor people can outspend and outlobby bankers and retailers (say, a year or two after hell freezes over) they won't be.

[Del]

Kathy: the credit thing is really scary. I didn't think anybody could request your credit report unless you gave them permission, e.g. by applying for a credit card. Hope this doesn't stymie future home improvements for you :)

Your friend's dad's idea is brilliant. Starting today, I am putting all the credit card offers (at least one per day, and often two because I kept my maiden name) are going into a special bin, and the confounding of the banks is going on the children's weekly chore chart.

(Susan, those links aren't working.)

I don't think any Congress ever has been serious about clamping down on predatory lending. I thought those places were largely regulated by the states, anyway. I hate them so much. I think the way I feel when I drive past must be like the way the pro-life people feel when they drive past an abortion clinic: "maybe a few desperate folks think this is their only place to turn, and maybe the people working here think they really are helping them, but it's all intrinsically evil."

[Susan Elisabeth Roberts]

This is very frustrating. I don't know why, but Thomas provides you with search result links that only work temporarily for some reason. Here's how to see the documents I was pointing to:

1) Go to thomas.loc.gov
2) Enter "S 256" into the "Search Bill Text 109th Congress (2005-2006)" text box at the top of the page and click the search button beside it.
3) I got three hits. The first link above pointed to S.256.IS, the bill as introduced (S.256.ES will show you the bill as it was passed). The second link pointed to a bookmark within that document, "Title II-- Enhanced Consumer Protection."

Sorry for the inconvenience.