See ya
July 15, 2009 | Wall Street Journal, alternatives, industry | Comments (0)The Wall Street Journal says we need to say “goodbye” to fixed rate credit cards:
Two major card issuers – JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) – recently switched some existing customers to variable-rate cards.
More than 90% of the offer letters card issuers mailed to consumers in recent months were for variable-rate cards, up from 60% in early 2008, while less than 10% were pitching fixed-rate cards, according to data from Mintel Comperemedia, a market-research firm based in Chicago.
“The fixed-rate-type cards are a dying breed,” said Curtis Arnold, founder of CardRatings.com, a consumer-information site.
The vanishing fixed rate credit card
July 9, 2009 | Wall Street Journal, alternatives, industry | Comments (0)From the Wall Street Journal:
Nearly all of Bank of America’s fixed-rate cards will be converted to a variable rate. The exceptions: some student accounts, accounts in debt-assistance programs and some newly opened accounts, says spokeswoman Betty Reiss. At BofA, customers will not be able to opt out of the changes, which they will start to see with August statements.
“Treat borrowers like adults”
July 8, 2009 | Wall Street Journal, alternatives, federal legislation, industry | Comments (1)How profound. A great piece in the Wall Street Journal today by Todd J. Zywicki, professor of law at George Mason University:
The idea of a financial product safety commission comes from Elizabeth Warren, a Harvard Law professor and the chairwoman of Congress’s oversight panel for the Troubled Asset Relief Program. She says that such a commission is necessary because consumers cannot buy a toaster that has a one-in-five chance of exploding, but they can get a subprime mortgage that has a one-in-five chance of ending in foreclosure.
But this simple-minded analogy misses the point. An unsafe toaster is a hazard to anyone who buys it. That’s not true for loans.
Sure, regulate everything
June 25, 2009 | Wall Street Journal, alternatives, federal legislation, industry | Comments (0)Now there’s a push to regulate pre-paid debit cards. From the Wall Street Journal:
Prepaid reloadable cards, payment cards that aren’t tethered to a traditional bank account, won’t get the same regulatory scrutiny under the recently enacted Credit Card Act of 2009.
Consumer advocates want to change that. They are urging the Federal Reserve to strengthen guidelines affecting prepaid cards from companies such as Wal-Mart Stores Inc., Green Dot Corp., NetSpend Corp. and H&R Block Inc. while the Obama administration’s focus remains concentrated on regulating the credit-card and banking industries.
I’ve been asking myself
June 17, 2009 | Wall Street Journal, alternatives, federal legislation, industry | Comments (1)What does the Center for Responsible Lending think of Obama’s Consumer Finance Protection Agency proposal? The Wall Street Journal found out:
Consumer groups also say an independent consumer protection agency would prevent lenders from seeking out the regulator with the lightest touch.
“You can’t say, ‘Who’s the easiest teacher? What class can I take so I can get the best grade?’” Julia Gordon, senior policy counsel for the Center for Responsible Lending, argued.
What in God’s name is she talking about?
Unstoppable?
June 16, 2009 | Wall Street Journal, industry, regulation | Comments (0)First Sen. Dodd, chairman of the Senate Banking Committee, and now President Obama endorse creation of a new consumer finance protection agency.
We agree with Barney Frank
May 7, 2009 | Wall Street Journal, alternatives, federal legislation, industry, media coverage | Comments (0)From today’s Wall Street Journal story on credit card reform:
The chairman of the House Financial Services Committee, Rep. Barney Frank (D., Mass.), said retroactive interest-rate increases are “outrageous” and should be banned. But he said it “would be a mistake” to put caps on interest rates -- as some senators want — or impose other restrictions on future interest rates for cards.
We’ll hold him to it!
Payday loan bill cuts choices for poor
April 29, 2009 | Center for Responsible Lending, Wall Street Journal, federal legislation, industry | Comments (0)Great letter in today’s Wall Street Journal:
Michael Calhoun, the head of the Center for Responsible Lending, asserts (Letters, April 18) that payday loans should be capped at 36% APR and endorses H.R. 1214, The Payday Loan Reform Act of 2009, for imposing limits.
At that rate, a loan of $200 for one month would generate $6 in interest. If Mr. Calhoun and the bill’s sponsors really think one can run a payday business by charging such a rate, they should set up shop. It is not hard to do. Clients will flock to their outlets instead of the “predatory” lenders they criticize.
The payday loan market is highly competitive and provides a needed service primarily for low-income people. Just let those folks try getting an instant loan from Citibank for $200 for one month. If H.R. 1214 is enacted, it will be back to thugs serving the low-income borrower market. That’s a “reform”?
Prof. Roger Meiners
University of Texas-Arlington
Arlington, Texas
Take that, Calhoun.
Payday loans help the poor
April 22, 2009 | Uncategorized, Wall Street Journal, federal legislation, positive media coverage | Comments (0)Tim Miller of Center for Consumer Freedom has a letter to the editor in today’s Wall Street Journal:
The real price of a product is how much you pay for it, not an arbitrary figure for how much you could conceivably pay over an extended time period. And short-term payday loans are actually cheaper than similar financial products like overdraft fees, credit-card cash advances, or paying bills late.
The whole letter it the must read of the day.
“More options…the better”
April 14, 2009 | Wall Street Journal, federal legislation, industry, media coverage, positive media coverage, regulation | Comments (0)A great guest piece in the Wall Street Journal today by Robert DeYoung, an economist at the University of Kansas. If you read one story today, read this one:
John Caskey of Swarthmore University, a leading expert on fringe finance, reports that the typical payday borrower is young, is married with children, has at least a high school education, and has a major credit card. So the characteristic that most differentiates a payday borrower from a non-payday borrower is simply the need for short-term credit.
Being a paycheck behind on our bills is a situation none of us wishes to find ourselves. But when that situation occurs, the more options we have at our disposal, the better. So long as both sides of the deal have full information, these choices are better left to households and their creditors.
Yes, competition drives prices down. Consumers get it. They know the cost of payday loans and the alternatives.
