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Credit Card Reform: Do the Banks Own the Senate?

That's the question Simon Johnson was asked on "The Ed Show" last night on MSNBC. What do you think? Post your thoughts in the comments section.

By Simon Johnson  |  May 14, 2009; 5:40 PM ET
Categories:  Banking , Nationalization  
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Comments

Yes, it is obvious that the banks own the Senate and have ownership stakes just about everywhere in the government. It's a bi-partisan thing. I am a little guy, I have no control over anything but my own spending. So I'm getting even with the banks and credit card companies. I cut up all my credit cards, and am making extra principal payments to pay them off quickly, and when they're paid off, it will be a cold day in hell before I have another credit card. I took my money out of the regular banks, and opened an account with a credit union. The banks can do what they want, I'm taking my business elsewhere.

Posted by: bwaldrop | May 14, 2009 6:14 PM | Report abuse

bwaldrop --

If you pay taxes, then the banks are getting your money, courtesy of the Treasury.

If your savings are in U.S. dollars, then the banks are also getting your money, courtesy of the Fed. (Providing ultra-low borrowing rates is, in essence, printing money and handing it to banks. That is how they will "earn their way out" of insolvency.)

I do admire your attitude, and I have done the same thing. I love my credit union. But let's face it: At this point, you and I are both working for Goldman Sachs whether we know it or not.

Posted by: _Nemo_ | May 14, 2009 7:07 PM | Report abuse

There is no question in mind these large banks owns the US Congress and the US Government.

Let me give you one clear example.

Why is it that Senator Sanders of Vermont had to offer limit on what banks can charge interest on credit cards?

Is not that the obvious reason why they are doing the credit card reform bill?

Dudd and his banking cronies deliberatley left out interest rate cap from his bill.

That was his job to include it. Instead he offered that job to somone one who will get not too many votes in the senate.

That is exactly why they ended up with 33 votes on the senate floor. If the same bill (with minor change) was offered by Senators Dudd and Grassley, they would have received substantial more votes than 33 only.

They refused to go that path simply because they were worried they will be spanked badly by the bankers.

Bankers always win. They have VEGAS odds on hand.

Posted by: AdvantaRipOff | May 14, 2009 7:30 PM | Report abuse

I am not sure what the solution is but something must be done. As the FRB has continued to lower interests rates bank have been raising interests rates to recoup some of their losses on home loans. I had a credit relationshiop with a company since I was 16 years old and am now 54 and have never been late on a payment. As a matter of fact, my payments are always early and more than the amount due. I noticed last mont one of my 2 cards with them went from 10.04% to 23.34% so I called. They told me there had been some changes to the Mastercard effectiving every customer and was done so they could offer 0% finance on some of the items in their retail chain?? I asked them to close my card which meant they would then need to go back to the 10.04%. Knowing I had an excellent credit score and this would effect it, which it did I know have a good score because of my debt to total credit lines available. I truly do not care as I think this practice it basically highway robbery. I will do the same if another bank tries this same approach.

Posted by: andrewluck | May 15, 2009 12:06 PM | Report abuse

I think it's time for a little consumer activism. We can put pressure on our government, without a doubt, but we can also let the banks know that most citizens are also consumers.

At what point will people finally stop paying on their debt? The Titanic is sinking. We're headed for a world where a credit rating is irrelevant. Don't people see this? Think of all those things that you think you need credit for--a house, a car, a college education and luxury items at the shopping mall and ask yourself, is there any other way that you can get these items without credit?

A house could easily be replaced by a rented apartment or a mobile home that you could save money for. They could say that people who don't pay their bills on time would find it hard to find an apartment. So, we're just going to have people who have money to pay for rent and are working just live out on the street because they didn't pay their light bill five years ago? Right.

What's wrong with moving closer to work, walking, a bicycle or public transportation?

I happen to think that I shouldn't have to pay for a college education. I think that should be paid for with tax dollars.

And do you REALLY need to buy luxury items at the shopping mall?

So you see....we don't need credit to survive. All of this credit was introduced into the economy as a means to help facilitate globalization. The long credit-fueled consumer binge in the United States has helped to give billions of jobs to third world countries, but it has also perpetuated the stagnant wages that has existed in the American economy since the 1970's. We now have people in Walmart making low wages helping to sell items that are made by people...making low wages. You only get what you give. This is the future.

So consumers should stop worrying about the fine china. The Titanic is sinking and it's only a matter of time before the rumors are confirmed. Consumers should stop trying to save their credit record because we're headed for a world where a credit rating is irrelevant.

http://stoppaying.blogspot.com

Posted by: johnsixtysix | May 16, 2009 12:09 PM | Report abuse

UNINTENDED CONSEQUENCES of CREDIT CARD RATE RESTRICTIONS

The Financial Services Industry is on notice by Congress and The FED that restrictions to their right to JACK UP Rates are on the way.

They were NOT prevented from JACKING UP every CARD to the MAX before the legislation become effective. THEY WILL, and already ARE! I got an increase from 10.9% to 17.9% today on a CLOSED VISA account I have had for 48 years...

I'm predicting MASSIVE INCREASES in rates as the consequence of the bill to limit rate changes! That will lead to huge increases in public debt service, pushing a great number of households into mortgage or credit card default.

The second 'bubble', CREDIT CARD UNSECURED DEBT, is going to burst suddenly, SOON. The Banks cannot be bailed out again, and the economy, market, and US Dollar are going to collapse.

Congress needed to PROHIBIT RATE INCREASES before the legislation's effective date. It's possibly too late today.

It's hard to believe that wasn't obvious. Perhaps the bill is political cover, while the Senators and Representatives that really are in Bankers pockets, gave them a huge window to do the dirty deeds. This will make the AIG BONUSES look trivial.

Posted by: A4e4Me | May 16, 2009 2:19 PM | Report abuse

Simon Johnson came across as a wimp in the interview. He doesn't represent me. Speak up man. You had a chance and will probably have more. We don't need one more wimp. We need one more Davidowitz!

Posted by: BringingMyPitchfork | May 16, 2009 8:38 PM | Report abuse

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