Because buying money isn’t any different than buying plywood it is no surprise that banks are going to change the way in which they sell plywood.
On Friday, Rep. Barney Frank, chairman of the House Financial Services Committee, will join FDIC Vice Chairman Marty Gruenberg and others in a discussion of “new, safe and affordable credit options for America’s underbanked.”
The policy discussion on Capitol Hill comes as banks – reacting to new credit card rules imposed by Democrats – start pulling the plastic from current credit-card holders, a move that is sure to lead to even more “underbanked” Americans.
Press reports note that Citibank recently canceled a number of credit card accounts affiliated with the Shell, ExxonMobil, Citgo and Phillips 66-Conoco oil companies.
Citibank also has notified some customers that interest rates on unpaid balances are going up – to a whopping 29.99 percent APR, effective Nov. 30. As the new law requires, customers have been notified that they may reject the change to their accounts, in which case their accounts are closed immediately and they may continue paying off their balances at current rates over five years.
So, when people who have a track record of not paying back their loans no longer have to pay the price of not paying back their loans, banks are going to react by no longer loaning them money they have no hope of paying back, that’s news?
But then again, maybe it is.
Dave seems to think that credit card companies are simply soaking the folks that use their cards and imposing new rules will not result in increased fees:
The new rules are likely to reduce some of those profits (that is, to the extent that companies don’t find new “gotcha” fees to replace the old ones). However, the rules are not likely to raise rates or fees for responsible card holders.
But that is not what we are seeing, in fact, it’s the opposite:
On Wednesday, USA Today noted that starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99 – an “experimental” move. Even card holders who have never carried a balance or paid late fees could be among those affected, the newspaper said. “You could be spanked for staying out of debt,” the article stated.
So once more, we see government stepping in and regulating where they have no business regulating. The result? Predictable. Higher prices and reduced supply.