Thursday, May 14, 2009

And We Thought Wall Street was the Bad Guys

Wall Street creative financial instruments that went bad are not the only sign of corporate greed. While Congress debates consumer protection regulations for the credit card industry, many of the companies it seeks to regulate are rushing to sock-it to customers before it's too late to milk them any further.

The credit card industry has enjoyed precious little regulation over the years and they have in recent times piled on  the fees and in many instances raised intrust rates even for well paying customers arguing they must do so to cover losses.

President Obama has urged a series of protections for customers. They include:

  • statements that are easily understandable
  • ban on unfair rate increases
  • prevention of unfair fee and interest charges
  • straightforward contract terms
  • protections for students and young people

Yet a proposal to cap rates at 15 percent failed on Wednesday. A sign that the industry still has power in the halls of Congress.

While some changes are likely to reach the President's desk this secession there will be an interim period of time before they take effect. Meantime, companies are busy tacking on amendments to customer's contracts and hiking fees.

Another ironic aspect of all this is at least one major company who swallowed up several other companies and received taxpayer funded assistance has sent notices to customers current and with good credit scores advising them it is necessary to increase their rates due to industry losses.

Sources: NPR Washington Times Credit FYI

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