Bankers Gone Wild!!! But there is HOPE

Response to NewsWeek article, February 7, 2008

Credit card companies take advantage of consumers.

Bank of America inherited this practice of unwarranted punitive rate hikes when they acquired MBNA. MBNA perfected this loan sharking scheme that is now widely practiced by almost all credit card issuers today. They have developed a formula partially based on FICO that determines whether the card holder is able to payoff card balance if their rate is raised up 30% in some states.

Many factors can target card holders for rate hikes:

• Late payments BOA or other creditors
  
• New revolving credit* Slow balance reduction rate
  
• Request for line increase
  
• New credit inquiries
  

As mentioned in the article, consumers can freeze there current rate by submitting a JSN (Just Say No) letter to the card issuer. Very few consumers know about the "Just Say No" to rate increase letter. Truly as the article says, the JSN is most often mistaken for promotional junk mail. The alert of the pending rate change is also delivered as an embedded small print message on the statement. Also, it is often the case that service representatives either don't know or pretend ignorance about JSN. The timing of the JSN offer and return deadline is made purposely short by card issuers.

Card issuer's claim of risk management is pure bunk. Greed is the only driver of this calculated scheme. Doubling or tripling rates undoubtedly unsettles the financial footing of the card holders. The true risk they are managing is the customer's propensity to pay off or charge off based on rate increase. The bullet points above are used in their formulas to calculate payoff risk. Credit card companies have risk management teams that intervene when customer receiving rate increases to stop paying or threaten stops paying. Their job is to push creditors to credit counseling services that manage debts by reducing minimums and possibly arranging rate reductions. Using these services can potentially adversely affect the card holder's credit rating. Banks gain by avoiding discharge and reflecting a more favorable accounting of their delinquency rates.

This consumer nightmare is made possible by the billions the financial industry has invested in lobbying our congress. BOA is reaping their reward for the investment they made in lobbying our government. Big businesses have had their way with us. Our government will allow big business do anything for a profit with little regard for consumers. The current mortgage crisis is just another glaring example. Mobile phones, cable, pharmaceutical, oil industry, just to name a few of the conspirators that have spent billions lobbying to screw us. "For the People and by the People" no longer applies to America. Clearly our government is "For business and by business". "In Greed we Trust" is our true creed of our current government. Wall Street matters a lot more than Main Street.

But there is HOPE. The only presidential candidate who refuses to take money from lobbyist - Barack Obama! His pledge to challenge the influence lobbyist have on our government, truly gives me HOPE.

No president can take on lobbyist alone. The presidential effort has to be joined by a grass root movement "by the people" to demand that companies like BOA treat consumers fairly.

I truly believe in Free Enterprise, but balanced by humanity and fairness. BOA is a clear example of how the balance of power between government, business, and "the people" is out of whack.