Evri + Twine Evri & Twine join forces! Read more.

Politics Politics / Items

The Great Debate » Credit cards unkindest cut for U.S. consumers | The Great Debate |

Get Feed
The Great Debate » Credit cards unkindest cut for U.S. consumers | The Great Debate |
Description
Government intervention or not, banks will be cutting up America’s credit cards at an unprecedented rate, with grave implications for the economy and company profits.

The U.S. Federal Reserve last week added more nutrition to its alphabet soup of rescue programs when it unveiled the Term Asset-backed Securities Loan Facility (TALF), under which, among other things, it will lend up to $200 billion to investors in securities backed by credit-card, auto and student loans.

It did so for a very good reason: the securitization market’s freeze now extends beyond mortgages, imperiling run-of-the-mill consumer financing and making it a certainty that many people who use credit to get them over “cash flow” situations will be, well, denied.
Original URL
http://blogs.reuters.com/great-debate/2008/12/03/credit-cards-unkindest-cut-for-us-consumers/

Comments

  • Public Comments

    • JDP JDP
      15 months ago


      Most seem to agree that drug producers and pushers are at least - if not more culpable - as drug users / abusers are. The US financial giants and many businesses (automobiles, retail, etc.) have "pushed" consumer credit and credit use to the max, in order to profit enormously from both consumption and interest / fees on it. Certainly overuse / abuse of credit by consumers deserves some blame. But the credit producers and "pushers" deserve as much or more - not only for their "pushing" but also because the credit would not have been there to abuse had they not offered it (stupidly!? unwisely!? with inadequate "risk assessment"!?)!

      Now it turns out that those financial giants and businesses are just as much addicted to credit as the consumers. Some of their addiction IS to the debt-full ways they encouraged on and enabled for consumers, but much (the majority!) involves debts / credit addiction they have themselves taken on - some for primary operations (see GM!) but others (especially by the finance industry) for pure gambling (highly leveraged collateralized debt obligations, credit default swaps, etc.), which dwarfs product / tangible items and operational debt by about an order of magnitude (somewhere in the range of $1-15 trillion for the former, but at least $55-60 trillion - if not MUCH more / hidden leverage / debt - for the latter).

      SO, having slopped at the public trough via massive bailouts, the financial institutions want to cut the consumer credit addicts off "cold turkey", and let the devil take the hindmost with the "unintended consequences". The consequences are hardly unintended or unforeseen on their part! They have their "cushion" (bailouts), and prospects of getting even more!

      Having basically been "forgiven" and/or subsidized by the bailouts for their poor credit ways (not to mention their complicity as "pushers"!), it would hardly be a "stretch" to FORCE the financial institutions to provide similar "forgiveness" and leniency for consumers (reduction of interest charges, elimination of fees, outright write-offs for some debt, etc. ... while at the same time being required to help "wean" other businesses and consumers from unwise accumulation of further debt ... rather than administering a "cold turkey" shock to them as well as to the whole economy!). Even if such "force" is not possible retroactively for the bailouts they have ALREADY received, it could be for any further bailouts AND with any continuing, existing "regular" support they enjoy from government institutions and programs (US Treasury, FDIC, FEC, etc.).
      Public Policy, Politics, Financial and Economic Global Crisis, President Barack Obama, Money and Investing, *Changing America?, Debunking Bunker, law & politics, The Singularity, Unintended Consequences/Unexpected Results, Mauro Magnani's FINANCIAL TWINE, Twine News, Activism, The Way Things Are, Finance & Economics, Accountability, Recession
    Add a Comment
Report This

Twine is about discovering, collecting and sharing the content that interests you. Learn More

Stats

First Posted By

JDP

First Comment By

JDP

Tags

Community Tags

Who's Interested In This?

Forgot your password?