Credit Card Congress: A Bankrupt Way To Do Business
http://www.msnbc.msn.com/id/7528519/site/newsweek/
From the party of fiscal responsibility comes a new reality:
They put huge deficits on plastic for our grandkids to pay. They sell us out to predatory lenders. They're the Credit Card Congress.
By Jonathan Alter
Newsweek
April 25 issue - Let's say Peter Jennings was named Jeter Pennings and instead of making more than $7 million a year, he earns $70,000, still comfortably middle class. Pennings has lung cancer, and he understandably wants the best treatment available. But his insurance company won't cover experimental chemotherapy, so Pennings has an excruciating but familiar choice: he can charge the $25,000 chemo on his credit card or go without the cutting-edge treatment. If Pennings is like most people, he chooses to put his health first. With credit-card interest and late fees often totaling 100 percent a year, he's now so deep in the hole he'll never dig out. But under current law, he can file Chapter 7 and get on with what's left of his life.
advertisementNot for long. Last week Congress sent a new personal bankruptcy bill to President Bush's desk, where he will eagerly sign it. The legislation, which is designed to make it much harder and more expensive to get out of debt, is not all bad. With 1.5 million personal bankruptcies a year, some change was necessary. But this bill, like so many others moving through Congress, comforts the comfortable and afflicts the afflicted. Worse, it provides for no distinction between those who get unlucky in Las Vegas and those who get cancer.
JONATHAN ALTER
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• Current Column
• ArchivesThe law was literally written by the credit-card industry, the same folks whose siren-song targeting of high-risk borrowers caused much of the bankruptcy problem in the first place. Financial services has now surpassed oil and gas as the most powerful lobby in Washington. It's a fitting coincidence of circumstances. First Congress puts a half trillion in budget deficits a year on the plastic for our grandchildren to pay off. Then it sells out the average American to predatory lenders, who have the run of the place. History should remember the 109th as the Credit Card Congress.
**WEDNESDAY, APRIL 20, 2005
• Ansen: A Chilling New Look at Enron
• Allan Sloan: For GM, the Free Lunch Isn't Free
• Gallery: Eerie Images of BankruptcyWe're not talking here about that irresponsible guy you see in the mall who is buying a flat-screen TV he cannot afford. Making it harder for him to weasel out of his financial obligations is fine. But according to a Harvard study of bankruptcy, the most thorough ever undertaken, this deadbeat is the exception. Nearly 95 percent of those who declare personal bankruptcy are swamped by job loss, family breakup, medical problems or some combination. For about half, it's the health-care costs that do them in. (Alcohol- and drug-rehab expenses account for only 2 percent of defaulted expenses.) About 10 percent have the pleasure of getting cancer and going bankrupt at the same time.
This is an argument, of course, for overhauling our broken health-care system, or at least providing catastrophic coverage. But if Bush won't go there, the least he and the bipartisan bag men on Capitol Hill could have done was avoid further harming middle-class people who are already suffering enough. "All of the money is on one side of the debate," says Elizabeth Warren, who authored the Harvard study. "And all of the hurting is on the other." And remember, these borrowers are usually trying their best to get out of debt. By the time a debtor has filed for bankruptcy, he or she has often repaid the original credit-card debt plus some interest but still owes thousands in interest on the interest and other fees.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Breaking apart at the seems.
At least we can all switch over to the "liberty" dollar at some point.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by discretedancer
...This is an argument, of course, for overhauling our broken health-care system, or at least providing catastrophic coverage...
I didnt' get this part. Is it against the law for people to purchase catastrophic health coverage?
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by Destiny
I didnt' get this part. Is it against the law for people to purchase catastrophic health coverage?
I have a health policy, including catastrophic coverage, but with a pretty high deductible - like about 5K. It's the only way to make health care affordable. I can pay my own doctor bills as I go, and if I break a collarbone, I'll go on a payment plan to pay that off, too. It's the calamity-level stuff I'm worried about, like if I need a transplant or chemo or something.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by Destiny
I didnt' get this part. Is it against the law for people to purchase catastrophic health coverage?
I think it's been suggested that every American be provided with "catastrophic" health insurance as a basic right. Not saying that's good or bad (and not the point of the thread) but that's what I got from this reference.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by discretedancer
I think it's been suggested that every American be provided with "catastrophic" health insurance as a basic right. Not saying that's good or bad (and not the point of the thread) but that's what I got from this reference.
Okay, that's what I thought at first, then I got to wondering. The reason I asked, is I have health insurance like JZ, since it's all I can afford. I pay my own routine doctor bills, but am covered for major stuff.
I haven't looked into the new bankruptcy law too much. But from what I've heard, the old one was abused too much by deadbeats. When my husband and I seperated, I had a ton of bills, people said file for bankruptcy, but instead I paid them off. While I have sympathy for people that have hospital bills through the roof, I also don't think they should be able to totally wipe them out and go on too easily either. They could have gotten insurance to cover some of that. It's always a hard call. You want to be compassionate, you don't want to encourage irresponsibility.
Re: Credit Card Congress: A Bankrupt Way To Do Business
I support a system that encourages paying off of bills rather than discharging them. Discharging should be an absolute last resort.
However, the counterbalance to this is that bankruptcy proceedings then become much more costly to both debtor and creditors. There's a lot of legal fees involved in a restructuring rather than a discharging, and creditors will also pay a lot more legal fees to wedge into line to get that $25/month payment that the debtor can afford.
I dunno, folks. The system needed reforming, and Congress could've done better. But that's pretty much SOS, isn't it?
Re: Credit Card Congress: A Bankrupt Way To Do Business
SOS or SNAFU...Situation Normall...All F. up
Re: Credit Card Congress: A Bankrupt Way To Do Business
The bigger point, and the point being avoided by the past few administrations, is that the equation of {actual costs of Nth degree medical treaments and surgeries} * {number of people who will seek Nth degree medical treatments and surgeries} - {amount of health insurance premiums + income tax money diverted to gov't medical coverage available to pay for Nth degree medical treatments and surgeries} = a large negative number.
For a fact it is now possible to prolong life via Nth degree medical treatments and surgeries. But extremely few people are productive/rich enough to cover the actual costs involved. Thus some form of rationing or prioritization has to be implemented in order for the financial equation to balance. Governments don't want to touch this issue since it essentially boils down to the gov't deciding which individuals are 'worthy' of the Nth degree medical treatments and surgeries needed to extend their lives. The new bankruptcy act factors into this by requiring people who wish Nth degree medical treatments and surgeries to pay for them up front, rather than paying with non-existant credit and shifting the costs to the gov't and other taxpayers/consumers after the fact via bankruptcy.
Re: Credit Card Congress: A Bankrupt Way To Do Business
so the fact that our governments (for decades) don't even try to balance the books, spend HUGELY more money than they take in while claiming to be the representatives of "fiscal responsibility" all comes down to health care costs? BS
THE TITLE OF THE THREAD IS CREDIT CARD CONGRESS
Now...your point about Nth degree medical care is important, but to me the deciding factor isn't the "value" in monetary-only terms of the person's life (money is never the only factor in a BALANCED equation) but rather the chance for meaningfull success/recovery. Basically....if someone will have a 10% chance of surviving/doing well after Nth step process, then NO. if the odds are 90% then yes.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Now...your point about Nth degree medical care is important, but to me the deciding factor isn't the "value" in monetary-only terms of the person's life (money is never the only factor in a BALANCED equation) but rather the chance for meaningfull success/recovery. Basically....if someone will have a 10% chance of surviving/doing well after Nth step process, then NO. if the odds are 90% then yes.
Not intending to derail this thread further, but when countries with socialized medicine decide who should receive life-saving treatment versus who should be allowed to die, the ingredients in that decision do include things like percent probability of surviving/doing well. But they also include things like the probable number of years that person will continue to live, work and pay taxes after receiving treatment, the person's likely income thus amount of taxes which will be paid annually after receiving treatment, and a host of other 'closet' financial factors.
As to the 'credit card congress', there are tons of points of possible discussion. One of my favorites is of course the Laffer Curve, i.e. that the economy is an interaction of economic incentives and disincentives such that running a short term deficit to create incentives for growth will actually result in more tax receipts and erasure of the deficit in the longer term.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by Melonie
But they also include things like the probable number of years that person will continue to live, work and pay taxes after receiving treatment, the person's likely income thus amount of taxes which will be paid annually after receiving treatment, and a host of other 'closet' financial factors.
and we need to decide how to balance that equation for the US...what our values truly are.
Quote:
As to the 'credit card congress', there are tons of points of possible discussion. One of my favorites is of course the Laffer Curve, i.e. that the economy is an interaction of economic incentives and disincentives such that running a short term deficit to create incentives for growth will actually result in more tax receipts and erasure of the deficit in the longer term.
Laffer is a great theory...if deficits are used IN MODERATION with really short term programs. Point: How long have we been operating under HUGE deficits that even economists warn are stifling our economy and risking our future? What do politicians do the first time anannual surplus is evident? Pay down the principal? No! They go deeper into debt.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Point: How long have we been operating under HUGE deficits that even economists warn are stifling our economy and risking our future? What do politicians do the first time anannual surplus is evident? Pay down the principal? No! They go deeper into debt.
Obviously, this sort of discussion opens Pandora's Box in regard to relative spending priorities (i.e. defending our country vs social benefits vs bureaucratic administration of a million gov't regulations) and the lack of political will in Washington to deal with the spending side of the equation. IMHO the root of this problems is that we now have 'career' politicians from all political parties whose #1 priority is re-election in a 2 or 4 or 6 year time frame, plus a core of registered voters who have no long term memories, who have little willingness to endure some 'pain' today in exchange for the promise of a 'better' tomorrow, whose primary interest is "looking out for #1" in terms of taxes and benefits, and who expect that government will solve every problem with no effort necessary on their part.
speaking of a glaring lack of long term memory ...
"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." -- Marcus Tullius Cicero
Re: Credit Card Congress: A Bankrupt Way To Do Business
Bankruptcy should be a near-impossibility for everyone, citizen and business alike. It should be as rare as an albino tiger. Few people truly need to declare bankruptcy.
Obligations are obligations and whether or not a court says they're gone, they're still obligations. We make it too easy for people to get out of paying debts.
Congressional spending is just as bad. Those assholes blow our money like it was a bottomless well full of cash. They even spend what we haven't given them yet. They're the worst credit-criminals out there.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by Hef
Bankruptcy should be a near-impossibility for everyone, citizen and business alike. It should be as rare as an albino tiger. Few people truly need to declare bankruptcy.
Obligations are obligations and whether or not a court says they're gone, they're still obligations. We make it too easy for people to get out of paying debts.
Congressional spending is just as bad. Those assholes blow our money like it was a bottomless well full of cash. They even spend what we haven't given them yet. They're the worst credit-criminals out there.
Hold on there - most bankruptcies are the results of two things: 1) Illness and 2) Divorce.
Given more than 60% of the population lives on less than 30,000 a year, all it takes is one accident or catastrophic illness (thanks to pollution and what have you where the poor live) to totally fuck up your finances. Take the time to think about how 30K is divied up amongst food, gas, rent, and finally savings (Ha! What's left?) all it takes is a $5,000 emergency room bill to fuck you up financially.
Divorce? I am a little less sympathetic about that - but I do know there are divorced people living with each other in Silicon Valley, simply because seperately they cannot afford their own homes (or even their current one should one stay.)
There does need to be a "consumer correction" and that is gonna be one hell of a correction.
That said, financial companies are sending credit cards to the family pet (literally.) They want all the benefits but not any of the risks. Seems to be the modus operandi of business these days.
I totally agree with you on Congress and their irresponsibility. I believe in my lifetime, the US will see a new leader arise with at least 30% or more public approval - and this leader will be outside of the system making the US a very interesting place to live.
Re: Credit Card Congress: A Bankrupt Way To Do Business
shades of Weimar Germany ? Karenski Russia ?
Re: Credit Card Congress: A Bankrupt Way To Do Business
Quote:
Originally Posted by Deogol
Hold on there - most bankruptcies are the results of two things: 1) Illness and 2) Divorce.
Given more than 60% of the population lives on less than 30,000 a year, all it takes is one accident or catastrophic illness (thanks to pollution and what have you where the poor live) to totally fuck up your finances. Take the time to think about how 30K is divied up amongst food, gas, rent, and finally savings (Ha! What's left?) all it takes is a $5,000 emergency room bill to fuck you up financially.
Divorce? I am a little less sympathetic about that - but I do know there are divorced people living with each other in Silicon Valley, simply because seperately they cannot afford their own homes (or even their current one should one stay.)
There does need to be a "consumer correction" and that is gonna be one hell of a correction.
That said, financial companies are sending credit cards to the family pet (literally.) They want all the benefits but not any of the risks. Seems to be the modus operandi of business these days.
I totally agree with you on Congress and their irresponsibility. I believe in my lifetime, the US will see a new leader arise with at least 30% or more public approval - and this leader will be outside of the system making the US a very interesting place to live.
Well, the way I see it, as a free America we have the means to become very successful or not. Anybody can come here and become greatly successful without getting choked out by the government. And on the flip side, nobody should be able to get a government handout when they've become highly unsuccessful. Charity should be the domain of private citizens (or groups).
The credit card companies suck. I had a credit card with a perfect score. I got sick of the bullshit fees, etc. I'd rather spend money I've already made without crazy interest. I gave the piece of shit back. I wish more people would tell AMEX and VISA to fuck off.
Re: Credit Card Congress: A Bankrupt Way To Do Business
Let me see, my industry collectivelly makes a $30,000,000 a year profit, but now I need to cry to Congress for help because my the debtors who are the source of my income declare bankruptcy after being charged interrest and penalties for being considered a "high risk group"
My company continually pushes for my "client" to impulse buy things he can't afford, and conducts studies on how to be more effective at doing it.
My company continally works with other industrys to make sure that paying for a service in "cash" will always be harder, and more expensive than in Plastic.
My company decides that the two states with "Homestead Laws" should be waved aside for Bankruptcy Protecttion by Federal Law, but my company will not respect any other states law for "Usary Rates" when it comes to regarding interrest rates, unless there is no cap on them.
My company says you need to go to "a non-profit credit card counseling company" to resolve your payment issues, my company actually really owns it and that your break will be a $10 less an month in the payments that are driving you to Bankruptcy in the first place.
My company constantly sell's your info to 3 rd party's, who call me trying to make me buy good's and services that I don't want, or not that great in order to put me in more debt.
My company decides your interest will stay good, unless there is a "late payment" and penalty's may apply; my company then decides to change your "due dates" in order to catch you late and be able to apply those penaltys.
My company pushes for your "Debt" to be changed into "Consumer Debt" that you will be unable to write off with Bankruptcy, but If my company commits any "Criminal Fraud" or makes a "Bad Buisness Decision" that results in my company needing to declare "Bankruptcy" I can do so easily without worry, and start again with no problem.
I just love the way this Congress and Special Interest works, by the time they're done with their ideological agenda; Americans will be reduced to Working for Walmart Wages, Having a measily 401 K plan, no health plan, and being unable to afford a home, while market demands make rent unaffordable to most hardworking people.
just venting...