Earlier this year, President Obama proposed and Congress dutifully passed a bill that "prevented credit card companies from deceptive practices." These so-called "deceptive practices" were, of course, clearly spelled out in every single document that the "duped" customers were required to sign. No matter.
Now, such practices as raising rates on variable rate credit card loans are simply prohibited by law. What is the practical impact of this nonsense? It is a return to the discredited "usury" laws of the eighteenth century. By denying credit card issuers the right to contract lawfully with their customers, you force the credit card issuers to simply quit dealing with low income borrowers. And that is precisely what they are doing.
As is well known and has been thoroughly documented, credit card issuers are eliminating credit card access to their lower income users and denying new credit cards to this same group as a response to the Obama legislation. Exactly when lower income Americans need credit help, the Obama Adminstration and the Congress have taken positive steps to make certain that lower income Americans will once again have to turn to loan sharks and illegal markets to obtain much needed credit.
As if this blow to lower income Americans wasn't sufficient, the Obama Administration is now pushing a new plan to deny lower income Americans access to the mortgage market and the consumer bank credit market. The new so-called "financial regulation" bill would prohibit "predatory" practices. The main import of these provisions will be to eliminate most of the bank lending to small businesses and to lower income households.
This is more of the "reverse Robin Hood" strategy of the Obama Admistration. My guess is that this is meant perversely to offset the redistribution schemes in the Obama stimulus bill. Lower income folks will only be effected if they need credit or a mortgage loan. Otherwise they will be fine.
The war on low income Americans continues. Wonder what's next?
