Everyone was relieved and jubilant to see the end of the standoff on the high seas off of Somalia; taking out the Somali pirates and the safe rescue of Captain Richard Phillips.
The story dominated television screens and the radio waves for three days, but the piracy going on in the U.S., with millions being held hostage by big banks; the same banks that needed billions of taxpayer’s money to stay in business, gets little, if any, coverage.
An egregious crime is being perpetrated on middle-class Americans that goes unaddressed by the Obama Administration, the Fed, and Congress.
Banks, for all intents and purposes, have been charging usurious interest rates for a long time. Rates of 24.9% to 35% are not uncommon for individuals, families and small businesses who have had some financial difficulties. This is a legal form of loan-sharking condoned and endorsed by Congress through their actions and inactions.
Defaults on credit cards are accelerating and the banks rush to make up these losses by increasing rates on good customers. With the growing problem of unemployment defaults on these high interest cards are likely to continue on a larger scale.
Contrary to what banks want people to believe, not all individuals who default on their loans are bad people. In fact, many are good people who have been encouraged by banks, mortgage lenders, auto dealers, and others to become over-leveraged. With the violent turn in the economy many found themselves in trouble.
What makes the debilitating increase in interest rates outrageous, if not amoral, is the fact that these banks are being bailed out by the same people they’re gouging and that the Fed is giving banks huge loans at, or near, zero interest.
So what can be done about it?
Most importantly, Congress needs to jump in with both feet and put an end to this criminal injustice; for it was Congress that allowed this to happen.
Senator Bernie Sanders is demanding a cap on credit card rates at around 16%. Senator Chris Dodd will be presenting legislation to not only cap rates, but eliminate the universal default stipulation which allows card companies to raise the interest rates on any card, even cards in which the card holder has met all obligations, if the card holder is delinquent or defaults on any other card or cards.
The actions by the banks are beginning to back-fire, and threatens to bring down the economy even as the government continues to throw billions of taxpayer dollars at the flailing banking industry.
Congress, if they truly want small businesses like mine and millions of others to survive, need to aggressively confront banks like Advanta, who is charging 35% interest on my business card, citing universal default. Every time I get ahead Advanta has seized the opportunity to lower my credit limit.
Instead of being a good corporate citizen, banks like Advanta, Chase, and others are slowly killing the very people that could heal them; middle-class Americans and small businesses in this country.
Urge your Congressmen and women to address this pressing financial issue before it’s too late. The alternative could be devastating; a 2nd Great Depression.
BACK TO TOP OF PAGE
Big Banks have been charging usurious interest rates to good people for a very long time. With the fed rate down to zero and banks getting billions of taxpayer dollars, something has to be done about it. Op-Ed submitted to the New York Times on April 13, 2009.