Delaying the real pain

As someone from the mortgage industry, I can relate personally to both sides of this issue. Banks are in trouble these day's and it looks like Congress is going to require that Banks move back to a more traditional institution of deposit and money making method's, separating investment banks back into their more traditional role, that of investments, stocks, bonds, & Mutual funds. So for Bank's the only place to go to raise money, except for Uncle Sam, is from credit cards, and over the last 6 month's they have raised rates on customer's across the board to rates as high as 29 percent, and charging the NEW rate to previously carried balances that were purchased at the lower rate's, increasing cash flow and profit's. The President and Congress's problem with the Bank card company's starts when cardholder's are penalized for "carry over balance's" that are charged the new higher interest rate retroactively, and as a simple point of interest 40% of all American's carry credit balances over month after month, with the normal understanding that only additional balances are to be charged at the new higher rate, this latest Bank tactic Uber-sucks.

NOW, for the flipside of this argument are the Screw-ee's OR as the Bank Card President's think of them, the RENT, people who every year are getting older, gaining nothing, and being charged more for housing, transportation, clothing, food, prescription drugs, insurance, maybe some entertainment, making a sharp increase from the card people a tough slog and as a portion of their monthly bring home pay these people who maintain a balance are 3 times more likely to have children than those in higher earning bracket's with NO BALANCE. In fact they are falling further behind every month as evidenced by the unprecedented $8000 dollar carry forward balance these people are carrying with them. These are people who earn from minimum wage to $100,000 per year for dual income's for husband and wife, but they can't just go out and get higher paying job's as so many Smart Guy's on television without financial worries one, I have heard say. If, ALL credit card user's were millionaire's who used credit card's for convenience sake only, and no middle income and below for their main customer's, then there would be NO WAY that Bank's would ever consider these draconian practice's because millionaire's each have the one asset at their finger tip's that scares these bank card companies, CASH To PAYOFF DEBT! Card companies would offer better terms, lower rates, and wouldn't claim to be able to change the agreement at the drop of a hat.

After year's and year's in the finance industry I've seen thousand's of credit report's and the people hurt most by high Bank Card rates are the people who need access to cheap, easy credit most, the standard of living for these people is declining and has done so since 2001 as everything else gets more expensive, they are more likely to use Rent to Own, drive used car's financed at high used car rates, they rent with increased lease payments every year, and they do so with each and every dollar spoken for so. So, for their $8000 card balance to go up OVER NIGHT by anywhere for 10% to 20%, depending up the "CREDIT RISK," driving the amount of their monthly credit card payment up $75 to $175 dollars per month.

I have been in the finance industry since BEFORE THE TERMINOLOGY, "Credit Risk" was morphed to mean indirectly, "what you interest rate is to be." In the mid 1980's Bank's began a tiered system for assigning an to their customer. In our household's when we were children our parent's taught us to buy what we can afford, so as children we learned that if you have less you can afford less, right? Not, according to the multi-trillion dollar banking industry, if you have spotty credit you could get an "A" rate, but that is highly unlikely, you are more likely to get a "B, C, or D" rate, and we all know just what higher rater do to our monthly payment's, they make them INCREASE.. . So, why do that to someone? Why not simply cap the card balance to a $5000 limit for the customer who qualifies for a card and is a riskier client for the bank? That keeps the customer from charging up to let's say a $10,000 limit, that opens the Bank less exposure, and that allows their customer to remain viable with low risk of becoming a bad debt, then eventually a charge off. Tell me, what could possibly be wrong with that plan?

I for one do not think the practices that our banks have become financially addicted to over the past 30 years is the kind of capitalism that anyone wants, delinquencies, charge-offs, then loss of economic power to both the cutomer and the bank, for the bank it is one customer at a whack, but it's stupidity to do what it is that they are doing. Uncle SAM needs to reel the banks in returning them to institution's of deposit once again, force them to be fair with customer's, if they don't hurry up and figure it out on their own, they have until Memorial Day.
Somebody provide a different solution if you don't like this one, but if you don't have an idea how to solve the issue and are no more capable than to potshot this idea, then in advance, Blow me. . . .