Thursday, March 6, 2008

Credit card companies now in the news

Citigroup, the owner of Citbank was in the news as to a lending company and bank that now faces financial shortfalls in what can be defined as bad lending practices. Uh, make that predatory lending practices in real estate and etc. that had Citigroup scrambling for cash from Middle Eastern countries. The main story for this was found on Lou Dobbs. Jeff Kosseff is a writer for Newhouse News Services. He discussed bills in Congress including one submitted by Senator Barack Obama that would regulate the practices of credit card companies. At least, as Kosseff noted, would give the lending companies rankings as to how they treated well or did not treat well their customer base. Seems to me that greed is at base of the predatory practices by such industry standards as Citigroup, Capital One, and others now placed on the 76 companies that face certain danger of folding under a crushing weight of bad and predatory lending practices. I mention Capital One in particular, even though that company wasn't specifically mentioned on "Lou Dobbs Tonight" because they are no longer a consumer friendly company. I would also argue that they have engaged in fraudulent schemes to try to get money, more, more, more to cover their losses of bad lending practices elsewhere. That is, against people who pay on time their monthly statements, who have actually paid the card off in full, etc. But, Capital One was in the news a couple of months ago when it became one of the passel of banks that started suffering from the sort of banking/lending influenza that abruptly saw stocks plummeting on Wall Street. There hasn't been a real recovery since. Should people who pay their bills on time, who pay off their bills be penalized because banks such as Citigroup, and etc. ran amok in lending practices? I should hardly think so.

Kosseff describes and I am sure accurately how tough if would be for Democrats to start regulating the credit card companies. One of the reasons being that they would simply find new ways to bilk their customers. The industry opposition to such regulations. I can imagine. After the GOP Congress passed a bankruptcy reform bill friendly to lending companies such as Citigroup and Capital One, no they wouldn't want to be held federally accountable for creating the lending conditions that could lead to:

  • Defaulting on credit card payments.
  • Homeowners who can't pay ballooning home loans and auto loans
  • And the resulting foreclosures that costs these same lending companies even more in bad debt write offs.

Well, they don't want to police themselves and their practices, then who will do it for them?

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