The Scolds at the New York Times, at it Again


The editorial wizards at the New York Times have written another of those feel-good public interest editorials that show what disconnected individuals they are. The subject is the scam that Congress has allowed and profited from, called credit-card legislation.

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The editorial wizards at the New York Times have written another of those feel-good public interest editorials that show what disconnected individuals they are. The subject is the scam that Congress has allowed and profited from, called credit-card legislation.
There’s not a soul at the Times who ever missed a payment on their
American Express—but there’s not a lot of soul at the paper anyway,
especially up there on the executive floors.
Titled Credit Card Buyer Beware, even that is its own sort of scam, as though those who are being ground into cat-food have a choice
in the matter. The common wisdom is that credit-card abuse is solely a
matter of the get-it-now generation getting it now. Like all common
wisdoms, there is some truth in that. But only some.

The
federal agencies that are supposed to regulate the banking and credit
card industries have failed utterly to keep pace with deceptive and
unfair practices that have become shamefully standard in the business.
As a consequence many hard-working Americans who pay their bills are
mired in debt — and in danger of losing whatever savings they have, and
perhaps their homes. Congress, which sat on its hands while the problem
got worse and worse, needs to rein in this sometimes predatory
industry.

Great opener, but factually incomplete. Federal agencies have not failed to keep pace. What they’ve done is keep pace entirely too well,
screwing down the lid on bankruptcy laws and erasing state controls on
abuse by a federal co-conspiracy. Congress sat on many things, but
their hands were not one of them.
What lawmakers did was to sell out their constituents for money.

(James
Ridgeway-MotherJones) To make the situation worse, the new bankruptcy
law that went into effect in 2005 makes it much harder to declare
bankruptcy, and requires filers, including those with very modest
incomes, to pay off much of their credit card debt regardless.
Initiated in 2001, the law was vigorously opposed by consumer groups
and unions, but championed by the president, whose largest campaign
contributor had been the credit card giant MBNA.

“I’ve never
seen a bill that was so one-sided,” said Consumer Federation of America
chair (and former Ohio senator) Howard Metzenbaum, at the time. “The
cries, claims and concerns of vulnerable Americans who have suffered a
financial emergency have been drowned out by the political might of the
credit card industry.”

If the New York Times wanted to change things, they’d put a first-rate reporter team on the case and determine who is being paid how much and by whom.
But banks, credit-card issuers and the consumer industry that relies on
credit-card purchases (which includes just about everyone) are all big
advertisers. It’s far more politic for the Times to go after Walter
Reed. The only conclusion we can draw from that is that newspapers
pretty much deserve to be losing market share and the confidence of
readers.

(MotherJones) . . . the credit card
business remains virtually unregulated at the national level. Companies
can charge—or change—interest rates at will. And while the companies
may be regulated at the state level, two states, South Dakota and
Delaware, have consumer protection laws so weak that credit card
companies simply set up shop there and run their operations from these
safe havens.

Increasingly unable to depend on
mass media for anything other than complicity, the abused are beginning
to band together on—what else?—web sites. There’s predation there as
well, with lawyers trolling for clients and charging front-end fees,
but there’s also a community of the victims and a sense of safety in
numbers against predator lenders.
Interesting things have been happening on the documentary film scene
as well. Michael Moore, inattentive to detail as he may be, spotlights
attention on the major flaws of what is (without a smidgen of irony)
known as health care in America. Locked out of any meaningful
information on the Iraq disaster, Charles Ferguson’s No End in Sight
is a blockbuster expose’ detailing, screw-up by screw-up, a dereliction
of duty by American government. Almost by default, credit-card abuse is
sure to be on the agenda—and soon, in a nation where $880 billion is riding the personal-plastic horse.

(NYTimes)
The scope of the problem was laid out in Congressional hearings this
spring held by Senator Carl Levin, the Democrat from Michigan.
According to testimony, one witness exceeded his charge card’s $3,000
limit by $200 — triggering what eventually amounted to $7,500 in
penalties and interest. After paying an average of $1,000 a year for
six years, the man still owed $4,400.

I guess it
shouldn’t surprise me that one of the nation’s major newspapers would
have to quote a Senate hearing in place of  investigative
reporting–far easier and cheaper. That ‘witness’ is not an anomaly,
he’s among the general population that have been fleeced by the banking
industry. Banking used to look on itself as a profession. You knew your
banker. Now it’s an industry and your debt (and mine) is sold off in increments to third parties who don’t have the slightest idea who the hell we are.

(MotherJones)
. . . a year later, (Hillary) Clinton, then a freshman senator, voted
for virtually the same bill when it was refloated by Bush. “Campaigns
cost money,” Warren writes, “and that money wasn’t coming from families
in financial trouble. Senator Clinton received $140,000 in campaign
contributions from banking industry executives in a single year, making
her one of the top two recipients in the Senate.”

That’s
changing as well, with Senator Barack Obama pulling together more money
than the other candidates in tens and twenties on the Internet. Those are the people with credit-card debt.
They don’t need to be instructed on the difficulties of the victimized,
they are many of them maxed out on several cards for medical bills,
unforeseen blips along the road of life and helping their kids through
college in a downsized world.

(NYTimes) That
experience has become all too common as the credit card industry has
stealthily adopted methods designed to maximize burdensome penalties
and fees, while ratcheting up interest rates as high as 30 percent.
Companies bombard unwary consumers with teaser packages that promise
very low interest rates to start, while reserving for themselves the
right to raise rates whenever they choose. The details are buried in
deliberately arcane contracts that run 30 pages long and that even
lawyers have trouble understanding.

Nothing stealthy about it. They bought the votes and the Times could follow the money and identify both the payor and payee, if they cared and dared to do it. Any respectable newspaper could unbury the fine print as well and shine upon it the light of a feature article.

Under
a provision known as “universal default,” a cardholder who pays a
credit card company faithfully can still be hit with a high penalty
interest rate for missing payments with another creditor. In another
despicable tactic known as “double cycle billing,” a cardholder who
pays $450 of a $500 balance is charged interest on the entire amount as
opposed to the unpaid balance.

How pleased would Master Card be if the Times—or a more courageous and less complicit paper if the Times is unwilling—wrote a series on universal default? Would an expose’ cause a change, as the Walter Reed series did?
Could that possibly be construed by Bill Keller under editorial policy to be a worthwhile goal?

State
usury laws would once have precluded many of these practices, but those
have been preempted by federal regulations that are increasingly
designed to make banks and credit card companies happy — rather than
protect consumers.

In classic blame the victim phrasing, the NYT editorial closes with the admonition that

“American consumers should think long and hard before they accept credit card offers that are too good to be true.”

Add
to that staying out of pools when you can’t swim, avoiding marriage
when you are unable to contemplate divorce, taking jobs with companies
that don’t offer health care and reading newspapers that write down to
you.
Which may or may not include the New York Times.
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