Booman Tribune ~ A Progressive Community

Democrats for Loan-Sharking

by BooMan
Thu May 14th, 2009 at 06:39:17 AM EST

Do you think credit card companies should be able to charge 30-40% interest? Neither did socialist Senator Bernie Sanders of Vermont. He introduced an amendment to the Credit Card reform bill that would have capped interest rates at 15% (which is the limit on credit unions).

(1) LIMITATION ESTABLISHED.--Notwithstanding subsection (a) or any other provision of law, but except as provided in paragraph (2), the annual percentage rate applicable to an extension of credit obtained by use of a credit card may not exceed 15 percent on unpaid balances, inclusive of all finance charges. Any fees that are not considered finance charges under section 106(a) may not be used to evade the limitations of this paragraph, and the total sum of such fees may not exceed the total amount of finance charges assessed.

Sanders needed 60 votes; he got thirty-three. Twenty-two Democrats voted against him. Of course Lieberman and Specter went with the credit card companies, but so did Patty Murry, Daniel Akaka, and Jon Tester. Freshmen Kay Hagan, Mark Warner, and Jeanne Shaheen voted with the credit card companies.

But Mr. Sanders said the card companies and banks were engaged in conduct that could get others hauled into court. He said one-third of all credit card holders are paying interest above 20 percent and as high as 41 percent.
“When banks are charging 30 percent interest rates, they are not making credit available,” said Mr. Sanders, who noted credit unions are limited to 15 percent. “They are engaged in loan-sharking.”

So, we have 22 Democrats that are for loan-sharking. And still the Republicans call them socialists.

Democrats for Loan-Sharking | 23 comments (23 topical, 0 editorial, 0 hidden)

Re: Democrats for Loan-Sharking (none / 0)

Steven, did any of the Republican Senators vote for the proposal? And, maybe, the 15% limitation was a bit too high. Perhaps, 20% would have been a more realistic figure. Still, I agree with the thrust of the proposal and thank god that Sanders is in the Senate.

Finally, our country will not have significant reform until we can break the stranglehold that money has on the electoral process. The national government must finance all federal elections. The present situation is ridiculous to the nth degree; it's like the Potomac is paved with gold.

Suppose you scrub your ethical skin until it shines, but inside there is no music, then what? Kabir

by Dongi 2 on Thu May 14th, 2009 at 08:10:03 AM EST

Re: Democrats for Loan-Sharking (none / 0)

It's me. I'm up early. Chuck Grassley, the ranking member on the Finance Committee, voted with Sanders. He was the only Republican to do so.

by BooMan on Thu May 14th, 2009 at 08:16:44 AM EST
[ Parent ]

Re: Democrats for Loan-Sharking (none / 0)

Thanks, ~~Steven~~BooMan. I'm up early too.

Suppose you scrub your ethical skin until it shines, but inside there is no music, then what? Kabir

by Dongi 2 on Thu May 14th, 2009 at 08:21:14 AM EST
[ Parent ]

Maximalism = Defeatism (none / 0)

EFCA (in its original form), the cram-down package and now the amendement on credit card interest are proposals that have one thing in common: they are gestures more than realistic proposals, and isn't that what they are supposed to be? The librul equivalent to the Republican right-to-life bills?
EFCA with the arbitration requirement was a non-starter. The cram-down limit of 31% of household income was so absurdly generous that of course it didn't pass. Sanders' credit card limit falls into the exact same category. Capping credit card rates at 15% irrespective of prevailing interest rates is needlessly rigid and punitive and offers everybody the prefect excuse to vote no. Unintentional? My ass.
These bills are all about populist posturing rather than about gathering a consensus to get actually something into law. If I were a Wall Street lobbyist, I would encourage flamboyant bills like this as best as I can, to get the topic off the table for a while.

by Guthman on Thu May 14th, 2009 at 09:08:56 AM EST

Re: Maximalism = Defeatism (4.00 / 3)

Flamboyant? Unrealistic? Just like anti-abortion zealots. Populist posturing? "Absurdly generous" to the little guy? Hoooh boy. That's some good conservative Democratic whining (leave the Bankers Alllooooone!)

And methinks that you're projecting. You and your conservative Democratic nitwits are the ones pretending to care about fair banking practices. I think Bernie Sanders is the one being honest here. His position isn't popular with Democrats because conservative Democrats have much more in common with the Republicans than they do Sanders, but he believes in a policy, that frankly is far from being radical, and he is pushing it. It's the conservative Democrats that are pretending to care about average Americans as they continue to do the bankers bidding.

We used to have usury in this country and most assuredly the current bank practices of charging 30-40% when interbank rates and CPI are so low would have definitely been usurious in times when Democrats actually fought for average Americans. That's fine if you want to link the usurious rate to a good interbank rate, and I actually would support that (and maybe then the Fed wouldn't be so concerned about artificially suppressing LIBOR under those circumstances) but I suspect that you are simply "posturing" for the bankers' benefit. You're the one that is trying to suppress any bank regulation by pulling out the time-tested canard of the crazy radical liberals hurting American capitalism.

I can see the Democratic party is not easily going to remove it's mouth from the rich pricks' dicks. Which is fine. That's what I expect to happen. Our country and the Democratic party is too far gone. It's dead. At least we know where it stands. Conservative Democrats think usury is fine and that the real problem is America is too tough on its bankers.

Oh, and the idea that 31% DTI requirement is a giveaway is laughable. The governments own data and previous practices have shown that anything much higher (and certainly the almost 40% you conservative Dems are pushing) is nothing but debt slavery. Conservative Democrats; turning Americans into debt slaves to save capitalism (while heaping tons of welfare to the banks).

by SFHawkguy on Thu May 14th, 2009 at 12:15:43 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

I would like to see an upper limit on interest rates that can be legally charged in this country. I also would like to see a functional write-down mechanism for individual credit, whether it is mortgage-based, or not. As things currently stand companies have plenty of tools in place that allow them to financially reorganize while maintaining functionality, individuals do not. Grandstanding à la Bernie Sanders isn't get us there though, is it?

by Guthman on Thu May 14th, 2009 at 01:12:58 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

Since you have all the answers. Lets hear your specific proposals. I'd love to hear them.

by Calvin Jones and the 13th Apostle on Thu May 14th, 2009 at 01:42:26 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

I thought these were relatively specific? Surely the limit for usury has to be a whole lot higher than 15% though if a functioning non-collateralized debt market is something you consider desirable (do you?). Surely cram-down limits have to be higher than 31% if a functioning mortgage industry is something you consider desirable (do you?).

by Guthman on Thu May 14th, 2009 at 03:19:59 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

Is it your position that you can't make a healthy profit by issuing credit cards with a maximum 15% interest on unpaid debt?

by BooMan on Thu May 14th, 2009 at 04:11:56 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

In the current environment where Libor is 0.35% banks could most certainly make a very healthy profit with a maximum of 15%. In Germany, where "usurious contracts" are legally void, courts have defined a usurious interest rate as one that is at least double that of the prevailing market rate. That would be the average rate for unsecured credit in the case of credit cards (no clue where that stands at the moment).
Establishing an immutable ceiling of 15% on consumer debt would shrink that market enormously though, I think that's clear, whether it's desirable or not.

by Guthman on Thu May 14th, 2009 at 06:07:32 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

Double the prevailing market rate? Given where interest rates are now, I'd bet that would be under 15% at present. Hell, I wonder what the CC rates in Germany would be now, given interest rates are so low.

by Calvin Jones and the 13th Apostle on Thu May 14th, 2009 at 08:39:35 PM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

Actually I checked. Here is an example of current German Consumer Credit rates: Santander Germany charges 7.98% for a 72 month credit of E10,000. But of course these credits are not given with the same reckless abandon as in the US, so default rates are also very low. In order to bring US CC rates down to levels like this you would need to completely deflate the CC market.

by Guthman on Fri May 15th, 2009 at 09:17:25 AM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

it's actually good policy.

He could have asked for 25% and he probably wouldn't have received more than a couple more votes.

by BooMan on Thu May 14th, 2009 at 09:18:34 AM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

Effectively ending the credit card industry may be good policy, but if that is the aim why not call it that and see what votes are there for that policy? It isn't as though I was a fan of the credit card industry, but a fixed top rate irrespective of prevailing interbank rates would make credit card lending borderline suicidal.
Maybe most of the senate is owned by the banks, maybe most senators are pro-usury. Voting against this amendment doesn't show them up as such though.

by Guthman on Thu May 14th, 2009 at 10:01:20 AM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

15% when interest rates haven't been above 5% in ages? Tie to 10 points above the Fed's prime rate .. so you are basically calling Sanders a fraud and a phony .. is that it? What are your suggestions? And BooMan is right .. Sanders could have made it 25% and still only gotten Grassley's vote .. and still not gotten those 22 Dems(none of the 22 surprise me .. except Tester .. Murray and Cantwell .. though I don't know about Tester anymore)

by Calvin Jones and the 13th Apostle on Thu May 14th, 2009 at 09:38:38 AM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

First, any top rate on credit cards would have to be floating. Second, any such top rate would logically have to be part of much broader anti-usury legislation, else it's scapegoating, which once again provides an easy pretext for voting against any limits.
Finally, why should Bernie Sanders of all people be thought of as being above facile left-wing posturing? I thought politically that was his stock in trade.

by Guthman on Thu May 14th, 2009 at 10:10:23 AM EST
[ Parent ]

Re: Maximalism = Defeatism (none / 0)

You go with the legislation you have. Not the legislation you wish you had. Second, why are you bending over backwards to try and please the banks?

by Calvin Jones and the 13th Apostle on Thu May 14th, 2009 at 01:39:45 PM EST
[ Parent ]

Cry me a river (none / 1)

for the poor abused banks that almost weren't allowed to continue in their accustomed lawless manner. The bill didn't lose because of a 15% rate or any other rate. It lost because the banks have been pouring millions into bribes for decades to buy exactly this outcome.

In a country that's awake, the bankers would be hanging from the nearest lamppost. In the American coma dream they can't even be limited in their usury. Punitive? Give us a break.

FDR's response to progressive demands: "I agree. Now go out and make me do it."

by DaveW on Thu May 14th, 2009 at 10:58:25 AM EST
[ Parent ]

Re: Democrats for Loan-Sharking (none / 0)

Let's summarize quickly:

cramdown- FAILED probably never to be heard of again

EFCA- WILL FAIL without huge-as usual-concessions

credit card interest- FAILED-suppose 41% is ok to charge us

Banks using OUR bailout money to pay lobbiests to lobby AGAINST our interests-$30M is the number I read

wiretapping-still going on

Patriot Act-still going, no changes

rendition-still going

Gitmo-still open, still torturing without any plan as to what to do with these detainees (new prison in Afghanistan perhaps?)

Abuse photos-not going to be released now

Bush/Cheney torture regime- not going to be prosecuted but we have plenty of "hearings"

Still losing 600K jobs a month 8% unemployment 15% if we count folks that have stopped looking or have taken part time jobs instead

Only $8B of the stimulous money handed out- 150K jobs created already supposedly. I want to know where they are so I can go apply for one

rethugs all over my teevee-democrats lost in the woods somewhere

healthcare reform- evidently the legislation will be written by insurance companies, big PHARMA and the Chamber. When do we the people get to go to the WH and sit at the table? SEIU is there but they have a long history of conceeding to companies to get a collective bargaining contract

Specter still voting against Obama's agenda but we're going to finance his re election compaign

banks still refusing to tell we the people where all of our bailout money went

Franken still not seated

Gibbs taking away reporters cell phones-classy

It appears Obama can talk the talk but can't walk the walk. I'm sick of the speechifying

CHANGE WE CAN BELIEVE IN
I could scream.

by Jan on Thu May 14th, 2009 at 11:18:56 AM EST

Re: Democrats for Loan-Sharking (none / 0)

And, of course, all of that is Obama's fault.

by ishmael on Thu May 14th, 2009 at 11:44:03 AM EST
[ Parent ]

Re: Democrats for Loan-Sharking (none / 1)

Of course not. However I think he mentioned about a hundred times that the buck stopped with him.

I just want him to stand up and at least say something, whip some votes, haul Reid in and say WTF, and throw his considerable political weight around.

I voted for him, worked on his campaign, was his delegate at our local convention.

I WANT HIM TO STAND UP AND FIGHT FOR US.

is that a bad thing?

by Jan on Thu May 14th, 2009 at 11:52:59 AM EST
[ Parent ]

Re: Democrats for Loan-Sharking (none / 0)

oh and

Chrysler says it will close 789 dealerships as part of its bankruptcy restructuring plan.

Probably a number of the car plants will be closed here and be shipped to low wage countries.

CHANGE WE CAN BELIEVE IN.

by Jan on Thu May 14th, 2009 at 11:23:22 AM EST

Re: Democrats for Loan-Sharking (none / 0)

Given that majority of the dealerships getting shut down were selling 100 cars a year, this should have been done a long time ago.

by Micheline on Thu May 14th, 2009 at 11:46:54 PM EST
[ Parent ]

Democrats for Loan-Sharking | 23 comments (23 topical, 0 editorial, 0 hidden)

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