Philosophically, I suppose I should have opposed the new credit-card law, which goes into effect on 22 February 2010: it's not like anyone put a gun to my head and told me that yes, I will sign up for such and such a card, and whatever happens to me after that, I will like it. And what's more, threatened Congressional action to move that start date up 11 weeks is just unspeakable governmental interference with the free market.

But then there's this:

On Tuesday [27 October 2009], the Pew Charitable Trusts released a study showing that interest rates rose by an average of 23% from December 2008 to July 2009.

Also, they found that all the largest banks and card issuers had engaged in practices that would be prohibited under the new credit card laws, such as hiking penalty rates on those who are just barely late on a credit card payment.

Way to endear yourself to the public, guys.

The argument made by the banks is simple: times are riskier, more people are defaulting, and we need to recoup our costs. From The Wall Street Journal:

"We're in a difficult lending environment," said Kenneth Clayton, senior vice president of card policy at the American Bankers Association, an industry trade group. "As you start adding regulatory or legislative requirements on the business of lending, it does make it more challenging."

And it's hard to take issue with that sort of thing, until you look at the more egregious efforts that are being made to answer that "challenge":

  • Wells Fargo added three percentage points to most of its credit accounts effective 30 November; risk was not a factor, and the letter to cardholders actually said so up front.

  • Citibank closed thousands of gas-card accounts under its control with essentially no warning to customers.

  • And if you're thinking, "Yeah, deadbeats," Fair Isaac, the Oz-like figure behind the curtain of the FICO score, reported that 70 percent of people losing accounts had, by their standards, good credit.

So now the purveyors of plastic have earned their place next to another purveyor of a different kind of plastic which also thinks it's the government's responsibility to guarantee their business model: the music industry, which would rather sue some college kid for downloading an album from somewhere than keep up with the realities of the times. They should be good company for one another.

As for that bit about the government interfering with contracts: don't make me laugh. Any arrangement in which one party has all the rights doesn't deserve to be called a contract. If I'm to pay more for something, I should be accorded some compensation in return: for instance, Wells Fargo, who called me more than twenty times during October in an effort to sell me some product I didn't want, should be required to lose my telephone number. (As did Citibank; on the other hand, Citibank didn't jack up my rate or cancel my card.)

Bottom line, for all you banking types: BOO FREAKING WHO. You're not too big to fail; you're not even too big to slap. And you're definitely not too big to mock.

The Vent

  1 November 2009

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 Copyright © 2009 by Charles G. Hill