weekend commentary - credit card debt forgiveness plan proposed
just when you thought you've heard everything ...
(snip)"WASHINGTON (AP) - An alliance of financial industry interests and consumer advocates on Wednesday asked federal regulators to allow lenders to reduce by as much as 40 percent the amount of credit card debt owed by deeply indebted consumers in a special program.
As the economic crisis has deepened and consumers increasingly are defaulting on their credit card debts, write-offs on the loans have mounted for banks and other lenders.
The unusual joint request from the Financial Services Roundtable and the Consumer Federation of America highlighted the urgency of the situation: consumers — even those with strong credit records — defaulting at high levels on their credit cards, while banks battered by the credit crisis bleed tens of billions in red ink from the losses.
"In this case we have a clear common interest," Travis Plunkett, legislative director for Consumer Federation, said in a telephone interview.
The request came in a letter to U.S. Comptroller of the Currency John Dugan, whose Treasury Department agency oversees national banks. The groups asked him to approve a pilot project allowing major credit card companies to sharply reduce the amounts owed by heavily indebted consumers who don't qualify for the repayment plans that are currently available.
"This proposal would make it financially feasible for credit card lenders to provide immediate financial assistance to American consumers who are carrying record levels of debt," the two groups said in a release.
Nearly all the biggest credit card banks have agreed to a temporary pilot program in which lenders would forgive as much as 40 percent of the amount consumers owe, allowing them to pay back the remainder over time, they said. The amount of debt to be forgiven would be determined case by case, depending on the borrower's financial condition; those receiving close to the maximum forgiveness level would be nearing a personal bankruptcy filing.
Current government rules don't allow lenders to offer repayment plans that reduce the amount of principal owed and borrowers to repay the balance over a period of several years. In cases where the principal can be reduced, under credit card settlements, borrowers normally are required to pay off the remainder over months rather than years.
Robert Garsson, a spokesman for Dugan, said the agency's staff hadn't yet seen the letter and declined to comment on it.
"The most important thing right now is to strike a balance between the lender and the consumer," Steve Bartlett, president and chief executive of the Roundtable, which represents more than 100 large banks, brokerage firms and insurance companies, said in a statement. "We are asking the (comptroller's office) to provide guidance to lenders that will in turn offer relief and stability to consumers."
Five big financial companies — Discover Financial Services LLC, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Capital One Financial Corp. — issue around 80 percent of all U.S. credit cards."(snip)
Re: weekend commentary - credit card debt forgiveness plan proposed
First - WHAT BULLSHIT!
Second - I haven't seen to much of the mortgage bail out being handed out to "people who need it."
These government programs are a whole lot of talk these days when it comes to working with the common folk.
Re: weekend commentary - credit card debt forgiveness plan proposed
well, not to stray too far towards the political, but every bailout so far has primarily benefitted the 'very rich' ( who stood to take big losses on their mortgage bond investments ) and the 'poor' ( who stood to be evicted from the houses they couldn't afford to buy in the first place). Why should future bailouts involving other types of 'subprime' be any different.
I believe the quote is 'privatize the profits and socialize the losses'. Of course the losers in this deal are 'middle class' taxpayers and stockholders (as opposed to bondholders ... few can afford the $50k or $100k minimum buy-ins to own bonds).
Re: weekend commentary - credit card debt forgiveness plan proposed
in fact, 're' investing in bailed out financial institutions has now become EXTREMELY profitable for the very rich. If you have $1 million dollars to spare, you could have gotten in on this offering ...
(snip)"Institutional investors outside the Middle East also can participate in Barclays's fund raising. The bank is offering as much as 1.5 billion pounds of remaining convertible stock on terms similar terms to those offered to sovereign wealth funds in a deal that closes at 5 p.m. today, Barclays said.
Barclays will pay a higher interest rate when it sells 3 billion pounds of preferred stock. The securities will pay 14 percent annual interest through 2019, and jump to 13.4 percent over the 3-month London interbank offered rate, or Libor, after 2019. The securities come with warrants that allow the investors to get stock for 197.775 pence apiece, less than yesterday's 205.25 pence closing price. The investors are also being paid a fee of 2 percent, or 60 million pounds, for their commitment to buy the securities. "(snip)
from bloomberg.com
Re: weekend commentary - credit card debt forgiveness plan proposed
the only thing that does this thread justice
is the saying
ONLY IN AMERICA...LMFAO!!!!!!!!!!
Re: weekend commentary - credit card debt forgiveness plan proposed
USUROUS RATES foisted on us by the Reagan admin.
It's been so destructive to let the banking system become predators. Trying to trap an unsophisticated public with come-on rates and then adding on near-fraudulent extra charges. Supported by an exploitative commercial industry promoting so much useless junk. Still stupid customers and lenders brought on this sham market by themselves by acting stupid. It's no wonder we are in trouble.
But forgiving debts is not the answer. Becoming smarter consumers is.
Re: weekend commentary - credit card debt forgiveness plan proposed
USUROUS RATES have been foisted on us loooong before Reagan administration.
Re: weekend commentary - credit card debt forgiveness plan proposed
Quote:
Originally Posted by
Adelina
USUROUS RATES have been foisted on us loooong before Reagan administration.
They went from typically 15-18%/year compounded upwards of 25%, and many of those extras fees (over-limit, over-late, wrong color ink, etc) weren't even around then as I recall.