Comments on: Credit cards unkindest cut for U.S. consumers Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: dan Tue, 09 Dec 2008 10:05:35 +0000 By banks cutting credit cards,is great, they are taking away there own rights to rip off the american people, with 20% interest and all kinds of hidden charges, I am glad they are suffering, it serves them right!

By: ddavid Fri, 05 Dec 2008 23:40:36 +0000 Guy Thompto: “The majority of the current financial mess started with the mandate of the Federal government to lending institutions to offer subprime loans. ”

YES THAT IS TRUE !! It also holds true for “private institutions” as it becomes an indirect forced consequence to follow the market to stay competitive. We, the shareholders not only require but “expect” that of our investments. [The greed of instant earnings instead of long-term results]. Therefore, the shareholder becomes very much part of the picture.

By: ddavid Fri, 05 Dec 2008 23:15:55 +0000 Perhaps it’s about time the consumer learns a bit about economics. Excess debt always has its risk and debt is not necessarily required to drive an economy.
For instance the German economy has been one the strongest in all of the world while its consumer debt has been one of the least.
I personally have had ZERO debt throughout my 68 years, although have to show by a long shot more than most Americans, therefore I cannot be convinced that it requires debt for consumer purchases to flourish; While we should not compare personal debt with corporate debt.

For the US consumer to ween himself off the debtor status will be painful for process for years to come, but it’s not a death sentence, we will become stronger when the healing process has ended. It’s also about time the government (on both local, state & federal level) to learn that there is no such word as “infinity” in debt.

By: Corey Fri, 05 Dec 2008 17:53:02 +0000 Guy Thompto, which federal mandate requires lending institutions to make subprime loans? If you’re referring to the Community Reinvestment Act (CRA), your information is incorrect. It does not require any such thing. The CRA was enacted in the 1970’s, and can hardly be blamed for the current economic situation. The CRA was enacted for the very necessary purpose of preventing lenders from “redlining”–a common and unfair practice in which depository institutions opened branches and accepted deposits in certain ethnic and lower socioeconomic communities while refusing to lend to those same depositors–effectively using these depositor’s money to make loans to predominately middle-class and affluent Caucasian borrowers. The CRA does not require institutions to make loans to non-creditworthy borrowers. Even still, the current mortgage crisis cannot be blamed on subprime borrowers, but on greedy bankers who capitalized on a convoluted and ill-constructed secondary market scheme that they believed lowered their risk of making haphazard loans far in excess of what borrowers could afford—both prime and subprime borrowers—and without regard for the real sustainability of such practices. If the CRA were to blame, the current mortgage crisis would have surfaced much sooner.

By: lance sjogren Fri, 05 Dec 2008 06:03:23 +0000 Debt of all forms is now so massive in the US that there are only two ways to deal with it:

1). A full-fledged bankruptcy by the United States of America, in which the nation, all the states, all the municipalities, many of the businesses, and most of the people go bankrupt en masse.

I have no idea what the side effects of that would be, probably the end of human civilization.

2). A massive money-printing binge by the government, enough to devalue the dollar by about 50%. One consequence of that would be that all debt would be downscaled by 50%, which would probably get it to a manageable level.

In scenario 2, we are talking about a 50% devaluation of the dollar, so we are talking about a 100% inflation over a short period of time.

This would be good for debtors (debt reduced in half), and creditors too (they would salvage 50%, instead of losing 100% when debtors all default)

Wages and pension payments would be doubled (they would now be paid in “hollars” rather than “dollars”, one “hollar” being worth half of the old dollar.

Those with cash & bond investments would lose 50%. That’s fair enough, they were the ones that got spared in the 2008 massacre, they can certainly afford a 50% haircut like the rest of us.

By: kelly p Thu, 04 Dec 2008 22:41:43 +0000 Thanks for an excellent post Ms. Peggy. Also, government pressure and requirements that banks make affordable loans available (“everyone deserves a home, car, credit car, education” etc. – whether they can pay it back or not) caused banks to stop keeping loans in house because they knew that they would not be repaid. Instead, they took their fees, sold them to Wall Street, had their friends down the hall at the rating agencies rate them AAA, took their fees, sold them to pension funds, foreigners, mutual funds etc. The builders, realtors, attorneys, appraisers, retailers, politicians – everybody – was making money without regard to the ultimate outcome. We do not have any great leaders now, so there were no adults around to stop it. Oh well. Very predictable if you have knowledge of history and human nature.

By: ap Thu, 04 Dec 2008 22:39:59 +0000 Guy Thompto: “The majority of the current financial mess started with the mandate of the Federal government to lending institutions to offer subprime loans. ”

NOT TRUE – 80% of Subprime mortgage loans were by PRIVATE lenders like Countrywide and American Home Mtg and Argent. Private lenders are NOT Regulated by the Federal Reserve and DID NOT HAVE TO COMPLY with the CRA (Community Reinvestment Act). Therefore Provate Lenders were NOT FORCED to write Subprime loans – they were encouraged to by firms like Goldman Sachs. These Private Lenders were financed by Goldman Sachs and Lehman Brothers, etc.

Wall Street gambled Mortgage Backed Securities in Derivatives at 40 X their reserves (see SEC Rule Change in 2004 requested by Goldman’s Hank Paulson). They lost their gamble, don’t have 40 X their reserves to pay – and the Taxpayer is being scammed big time.

By: Peggy Thu, 04 Dec 2008 22:02:31 +0000 As a banker in the ’80s, I was leery of the deregulation that allowed interstate banking. That is the cause of the “loss of community values”. Banks were allowed to operate using the most advantageous laws like having a bank in a state with no usuary laws. That allowed them to charge whatever they wanted with no limit. We should reinstate the usury rate at 18% as a national high. We should treat the banks as a monopoly and do away with the interstate banking laws. Making the banks have only community employees and autonomy to operate as the community dictates. It is difficult to cheat your neighbor the parent of the kid your kid plays ball with, or across the bridge table. When you interact with your customers everyday in real life terms, you take better care of their money.

By: Peggy Thu, 04 Dec 2008 21:55:07 +0000 Capitalism, or free enterprise market economies also must be true to their own philosophies and stated purposes. If you kill the goose that lays the golden egg, you are a pirate, not a capitalist and as such you should be identified and relieved of your authority.

By: Joe S. Thu, 04 Dec 2008 21:20:28 +0000 “The U.S. Federal Reserve last week added more nutrition to its alphabet soup of rescue programs when it unveiled the Term Asset-backed Securities Loan Facility (TALF), under which, among other things, it will lend up to $200 billion to investors in securities backed by credit-card, auto and student loans.”

The above paragraph summed up for me the root cause of the problem and the solution. The government is bailing out the investors and the banks but doing nothing for the average consumer (taxpayer). $200 Billion in tax cuts to the American public to pay off credit cards or to spend in the economy (if someone is already using credit wisely) would go long way to both remedy the problems of the banks and the economy. If 70% of the economy is driven by consumer spending then anything that puts money back in the hands of the consumer is going to help it recover quicker than bailing out the producers (banks, car companies….etc). Thank God both Obama and McCain supported tax cuts for the middle class in the election. This one measure alone will do more than anything that Paulson and Co. has thought of yet. By the way, someone suggested a few weeks ago giving out (by lottery) 1 Million $25,000 vouchers to Americans willing to drive an american car from the big three. This would take 1 Million vehicles off of the lots and keep the factories producing replenishment vehicles until the credit market gets back to normal. The auto bailout would help both the consumers and the producers. Better in my opinion than trying to manage a $25 Billion investment in the big three out of Washington by reviewing business plans. I wish someone in Washington would paraphrase Bill Clinton from his first election “It’s the consumer stupid…”