The Banking Industry Responds

Here is a letter from the American Banking Association (ABA).   I will attempt to translate, my comments will be in bold italics

Dear Senator Reid and Senator McConnell:

These are the Majority and Minority Leaders of the Senate, respectively.

I am writing you on behalf of the American Bankers Association (ABA) with respect to our position on H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009, currently being considered on the Senate floor.

I mention this because we supply so many campaign contributions, not because the credibility of our organization is at an all time low following the worldwide financial crisis we caused which necessitated the subsequent government bailout.

ABA recognizes that the Senate bill contains a number of important consumer protections embodied in recent regulatory action, and acknowledges that change is forthcoming in the way the credit card industry and its customers interact.

As much as we would love to kill this bill, we don’t stand a chance of doing so now (see previous comment).

However, we strongly believe that any legislation in this area needs to achieve the correct balance of consumer protections and market flexibility so as to not jeopardize access to credit.

We have contributed so much to your campaigns, so please, please, water this bill down as much as you can.

ABA remains very concerned about the contents of H.R. 627 (as amended), and believes that if it is enacted as it currently stands, it will have a dramatic impact on the ability of consumers, small businesses, students, and others to get credit at a time when our economy can least afford such constraints.

As big banking interests, our only concern is for the little people.   Sure, they support this measure whole heatedly, but they really don’t know what is good for themselves.   Only we do, and you should trust us because we are big banks who always manage our own affairs so wisely.

The bill contains various provisions that limit a lender’s ability to manage risk, price fees, allocate payments, and otherwise prudently conduct business.

We won’t be able to charge interest on balances card holders have already paid, or charge $40 late fees if you pay your $10 bill a day late, how will we stay in business!?

We believe these limits will necessitate reductions in available credit given current economic conditions, while increasing the price of credit where it remains available.

Consumers may receive several pounds fewer “pre approved” credit card offers in the mail every month, Oh The Humanity!

We are likewise concerned that amendments could be adopted on the Senate floor (such as interest rate caps, interchange, and bankruptcy provisions) that could seriously exacerbate these problems, with serious ramifications for consumers and the economy above and beyond those already in the bill.

We are just looking out for consumers, as they really like high interest rates.  Really!

For the above reasons, we oppose H.R. 627 as it is currently constituted, and urge opposition to amendments that will further harm our ability to meet the credit needs of consumers and others.

Please do not actually speak with any actual consumers or anyone from consumer groups.   I am sure they all agree with me, so don’t bother asking them.

We ask that these concerns be addressed before this legislation is delivered to the President for his signature.

Thank you for considering our views.

Did we mention that we make lots of campaign contributions?

Sincerely,
Floyd E. Stoner
Executive Vice President, Congressional Relations & Public Policy
American Bankers Association

My Conclusions

The industry thinks the sky is going to fall if this bill becomes law.   I am clearly not shocked.    I am reminded of how the movie industry testified to Congress in 1982 that their industry would die if VCRs were not outlawed.    27 years later the local megaplex is still going strong.

I think the worst part is the paternalistic rationale they use to pretend that they are just looking out for the interests of consumers.

Had they offered some moral or legal reasoning for opposing this bill, I might disagree, but at least I would respect their position.    If they were opposing this bill because it would hurt their profits, I would have at least applauded them for their honesty.

Instead, I am forced to ridicule the most poorly managed and least credible industry in the world today, as they have the audacity to claim that they are in a better position than I am to represent my interests as a consumer.

With any other industry, this would be outrageous, with the credit card industry, this is merely par for the course.

Tomorrow’s Column

Your Reward Card Guru exposes one terrible proposed ammendment to the Credit Card Bill of Rights that should never see the light of day.    On this proposal, I actually  agree with the both the credit card industry and even the loan sharks!    This proposed ammendment is so heinous that it would make even me switch to cash!