James Pethokoukis

Politics and policy from inside Washington

Did Obama just raise your credit card rates?

Jul 1, 2009 12:50 UTC

Flood the White House switchboards! Considering that the government is about to be a 34 percent owner of Citigroup, couldn’t Team Obama have quashed the company’s decision to raise rates on 15 million cardholders — just as new curbs legislated by Congerss are about to kick in?

Perhaps, but such a move wouldn’t have made much business sense: a) unemployment continues to rise; b) higher unemployment mean higher default rates; c)  add that to the reality that financial companies already face more writedowns on commerical real estate and other loans; d) the money to deal with these losses has to come from somwhere. So Uncle Sam the stakeholder has different priorities as Uncle Sam the consumer advocate.  Of course, consumers may soon have an official consumer advocate to help them deal with finanicial product issues — such as enforcing new credit card rules. Of cours, one side effect could be higher rates and less credit availability.

Bair vs. Pandit: Be cool people!

Jun 5, 2009 22:26 UTC

A sneak preview of my upcoming column on the WSJ report that the FDIC’s Sheila Bair is trying to push out Citi’s Vikram Pandit:

What’s more this apparent play to push out Pandit comes at the same time Bair has been suggesting the FDIC be designated at the new “super-regulator” to deal with systemically important financial institutions. (The Federal Reserve now appears likely to get the designation instead.) All this plays into a growing suspicion — originally sparked by her quick-trigger seizure of Washington Mutual — that the former business school professor and Republican political aide, passed over for Timothy Geithner as Treasury Secretary, is doggedly determined to maintain her “power player” status in the nation’s capital.

Enough. Enough now. The first 4 1/2 months of the Obama administration has seen record spending, the de facto nationalization of General Motors and Chrysler, and the legislative wheels put in motion for the wholescale, government-led revamping of the country’s healthcare and energy industries. Any business or investor looking for certainly or stability in public policy would find only the whirlwinid. This all began on Wall Street, let it end there as well. Allow the banks to take advantage of the favorable yield curve and inch their way back to health — and let the head of the FDIC return to relative anonymity.