Thursday, April 07, 2005

Racketeering and usury . . .

About a couple of weeks ago I got another splendid offer from a credit card company. Terms?
  • 23.99 APR for purchases.
  • same interest for cash advances
  • 29.99 APR for late pay
  • Grace period? NONE
  • variable rate: may go up, depending on prime rate, but will never be lower than the above!
  • one time fee: $50.00
  • every month fee in addition to anything else: $10.00
  • "This Offer to establish a credit card account is made by XXXX of Wilmington, DE("we", "us", "our")." . . .[Name withheld to protect Those Who Should Feel Ashamed. But I could supply the name if I had to. I kept the offer.]
Is there any doubt in anybody's mind as to who is the marketing target for these offers? Only people who are desperate for credit cards. You know. People who are looking for another month or two of barely getting by, making minimum payments on credit cards and hoping for a miracle to come up at the last minute to save them from having to file for bankruptcy and screw their creditors. Of course, the miracles don't happen but the bankruptcies do. And so, people such as this bank want to be protected from bankruptcy discharge by means testing - putting more debtors into Chapter 13 where they will have to make payments to a trustee for distribution to creditors.

Understand. I'm not against means testing. I'm against credit card companies with terms such as these. In my opinion - not the bakruptcy code's opinion but my opinion - if a creditor with credit terms such as these gets one crusty dime out of a Chapter 13 administration, that dime is fraudulent as to "straight" creditors, like unpaid doctors' bills, the landlord, the cable bill, and the paperboy.

There are usury laws, of course. Just you try, as a citizen who isn't a bank, to loan money to your neighbor for a new business start-up on terms such as the above, and then sue in court to collect. Why, it would be against the law.

But not for credit card companies.

The old mob, you know, the stereotypes with the bent noses, used to charge 6 for 5. That is, pay back $6 for a $5 loan. Work it out and figure it out. But for heavens sake don't mention the word, "racketeering." This isn't crime; it's business. I mean, bidness.

And now, this. I instantly thought of the credit card offer I'd recently received. (I had kept the offer, thinking I might write to my congress critters about it.) The credit card companies want protection from even the possibility of class action suits, for when they improperly charge extra charges. Understand, contrary to impressions left by carefully planted press releases, it isn't easy to get a class certified. I'm not in love with class actions; they should be hard to certify. And judges should look carefully at class attorney fees - maybe even submit the question of plaintiff class attorney fees to the jury. But, for heavens sake, keep the possibility of a class action in place because there is no other practical means of protecting a consumer who feels he got screwed - once again - out of thirty bucks. (But, hey, thirty bucks, each, against all the customers, starts looking like real money, right?)

The problem isn't, of course, the banks. It's the politicians of both parties, state and federal, who have rolled over with their paws in the air, hoping to have their bellies scratched.

Our forefathers wouldn't have stood for this. Neither would our foremothers, our forebrothers and foresisters. And if there were forepets, them, too. They'd all be getting together to dump tea into the harbor, or to organize a million foreperson march, or something.

So, how about a change in the usury laws? No court judgment to any creditors on any obligations of any kind that include any amount more than 12% a year over the principal. Oh, hell, even 15% interest would be okay.

And, as you probably figured, I didn't accept the credit card offer.

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