Just Stop It

This post turned out to be factually incorrect as to the contents of the “bill of rights;” please see this new post for clarifications.

Anyway, apparently Congress is right on the edge of passing a “Credit Card Holder’s Bill of Rights.”

From what I’ve heard, it sounds much like COBRA and health insurance: this Bill of Rights seems to address only a few peripheral issues surrounding credit cards while doing nothing to correct the actual problem.  Likely outcome: the credit card companies will use any new restrictions as another excuse to demand more taxpayer money — much like the health insurance companies pretty much priced COBRA out of reach because it cut into their profit margins too much. 

Bullies are, after all, quite predictable.

One feature of the legislation is that it protects “young borrowers.”  I imagine that would be mostly 18-year-olds in their first year away from home in a college dorm (see edit), suddenly finding themselves getting bombarded with credit card offers.  Of course these kids, in spite of the fact that they are allegedly smart enough to get into college, are pretty dumb when it comes to practical matters.  And so they get themselves credit cards, and quickly get into deep trouble.  (EDIT: upon further reading, I found out that this part of the legislation is even more useless than I thought: the bill merely prohibits offering credit cards to anyone under 18 years of age.)

Or rather, they were doing this until recently.  You see, the thing is that this problem has likely already stopped with the crash of the credit market last fall.  There is no need to legislate it out of being.  It already stopped being.

The reason it stopped being is that the fantasy money that was funding it stopped flowing from money trees at the same time that mortgages for people without proof of income (or proof of much of anything) stopped being written. 

And this part of the legislation does nothing to help those who likely are having the worst problems — and those people are not teenagers, but adults who for one reason or another have dug themselves into Credit Card Hell.  If you are having a wingnut knee-jerk and shouting “losers!” deal with this: it’s not always just because they wanted to buy every member of their family a wall-mounted flat screen TV for the holidays (although you may remember, asshole, that this kind of spending was what was propping up your precious Free Market Economy).  Many people I know have been using credit to pay for medical bills and other serious expenses where the price has become otherwise unaffordable without giving up eating for several months.  See COBRA for details, and if you can’t stop drooling even then, go off and have another fucking tea party and see what good that does you.

For those of us who can comprehend actual problems, what all this means is that this is a meaningless bit of feel-good legislation that tackles no real problem.

Another example of this is yet another aspect of this legislation that doesn’t help anything.   There is to be a 45-day time period during which consumers have to be warned of impending interest hikes.  So?  There’s not actually much difference between being warned of a financial hurricane 45 days in advance and not being warned at all, because these days, you can’t run to another creditor to help you correct it.  As in, there is no one out there who will bail anyone out but the banks who are causing the problem to begin with.  So you’re going to get hit by a hurricane, anyway — the only difference will be that you’ll know about it 45 days in advance.

And so, from the looks of it, we have another COBRA on our hands.  The credit card companies will quickly slither through the canyon-sized cracks even while they hiss for more federal bailout money because of this terrible thing that’s been done to them, and we’ll shortly have a system as poisonous as any we have seen.  Likely nothing will be done about it for at least another decade, if then.

In the meantime, however, we all have one weapon with credit cards that we do not have with health insurance: to whatever extent possible, stop using them.  The banks have forgotten that we can do this.  Let’s remind them.

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