Politicians Have Filled the Pipeline with Pain for Middle America
The announcement of financial overhaul legislation in the U.S. Senate this week smacked of irony as its author, Senator Chris Dodd—the recipient of a sweetheart rate on his home mortgage—announced a sweeping 1,136 page piece of legislation to “protect consumers.” It appears at this point that the protection consumers really need is from this nation’s politicians, who have too long lined their pockets with campaign contributions from big business and who have allowed financial institutions to fleece Middle America.
It wasn’t but a couple of years ago that big business and congress all but eliminated the ability of consumers to effectively discharge their debts in bankruptcy proceedings. At the same time, banks and financial institutions were making loans to borrowers who clearly could not qualify. Banks, financial institutions and credit card companies continued extending generous limits on credit cards and lines of credit to consumers. Now be fair, much of the mortgage activity was driven by Democrats in Congress who believed that everyone had an inalienable right to own a home, evidently whether they could afford it or not. And naturally, Republicans, who long ago sold their soul to big business, positioned their bank and financial institution contributors for all of the mortgage business.
Middle America knew and assumed the risk that what goes up would someday come down, perhaps crashing down, which it did. But when it did and as many Americans lost and continue today to lose their jobs, bankruptcy was and is simply not an available option. Our politicians and big business have virtually eliminated it as an effective option for many consumers.
Now, consumers that are interested in honestly reworking their mortgages cannot even get a return phone call from their lender, and if they do they are told they do not qualify for any sort of loan modification. It’s really great to see all that stimulus money going to work for loan modifications . . .
So here we are—after encumbering themselves with mortgages they cannot afford, credit cards and credit lines they cannot pay down, financial institutions have the shameless audacity to raise consumers’ credit card interest rates up to 30%. Clearly, consumers have to take a certain degree of responsibility for their own condition, but how did our elected members of Congress and the Senate allow big business to systematically repeal consumer protections at virtually every turn?
Middle America really needs to understand how and why our politicians have allowed financial institutions to raise credit card interest rates to a level that is clearly usury. No consumer knowingly consents to a 30% interest rate, regardless of whether there’s a meaningless disclosure on the back of his or her monthly credit card statement in tiny type. Nor do consumers knowingly consent to what has become an ordinary practice by banks and financial institutions of charging consumers $35 for overdraft protection or checks returned due to insufficient funds. Sure, consumers can choose to bank elsewhere, but the practice of gouging consumers with fees has become so universal by financial institutions that consumers really have no meaningful choice.
Without bankruptcy as a viable option to many in Middle America, there is plenty of pain left in the pipeline for years to come as consumers will remain enslaved with unmanageable consumer debt. With no end in sight, consumers will continue to labor under the heavy load of mortgages on devalued homes they cannot afford, credit card bills they cannot pay, and no available remedy in a bankruptcy court that can set them free to start over. It appears that consumer protection is dead and caveat emptor is alive and well.