Hey Congress: "Put a Cap on those Interest Rates, Now!"

Americans are awash in personal debt! They are being bled dry by the Credit Cartel, one of the most powerful, grasping cliques in the country. According to the Federal Reserve, the total amount of revolving credit debt is around $800 billion today. About ten percent of those with credit cards have admitted making only minimum payments in the last six months. Some interests rates run up as high as 29 percent, not counting the penalties and higher rates and fees for late payments that would be the envy of a Mafia loanshark from the John Gotti Gang. As a result, some desperate debtors have resorted to even paying one pursuing creditor off by taking out yet another credit card and/or if they can, taking out an equity loan on their home. Unfortunately, the juggling of overdue accounts may only postpone the inevitable, which can lead straight to the bankruptcy court. [1]

Now, thanks to a complicit Congress, the people are being squeezed even more. The bankruptcy laws have been changed to favor the Credit Cartel. On April 20, 2005, President George W. Bush signed a Bill into law which will make it “even harder for debt-ridden people to wipe clean their financial slates by declaring bankruptcy.” This mean-spirited, anti-consumer measure will prevent a debtor from getting a so-called “fresh start.” Instead of having their obligations erased, as they could have done under the original law, they will now be required to “work out repayment plans.” [2] In other words, they will be hounded into an early grave by these financial parasites.

One major critic of this latest screw-the-people device is Travis B. Plunkett, Legislative Director of the Consumer Federation of America. He said, “The big winners under the new law will be the special interests that literally wrote it, particularly the credit card industry. This is particularly ironic because reckless and abusive lending practices by credit card companies have driven many Americans to the brink of bankruptcy.” [2] Like many of my fellow citizens, I receive in the mail from one to two credit card applications a week. So just imagine if you are seriously in hock to these “Stranglehold Finance Co.” types, how easy it is to get more deeply in debt to them. These same companies also run commercials to the same tune, repeatedly, on your TV and Cable channels. There is hardly any way a person can escape being mesmerized by all of this come-and-get-this loan propaganda.

Last week, the people could tell who their real friends in the U.S. Congress were when the Bankruptcy Bill came up for a vote. The House voted 302-26 for it and the Senate, too, by a 74-25 count. On the House side, 73 Democrats supported the Credit Cartel. Shockingly, this included ten members of the Congressional Black Caucus. Rep. Steny H. Hoyer (MD-5th) also showed his true colors by voting “yea.” Hoyer was an ex-President of the Maryland State Senate before becoming the Assistant Democratic Whip in the House of Representatives. I was always suspicious about this guy’s “liberal” credentials – mainly because Hoyer dresses like a Tory, but more importantly, he had a photo of (triple gasp) ex-British P.M. Margaret Thatcher mounted on his Capitol Hill office wall!

On the Senate side, the only way opponents of this Bill, S.256, could have beaten it was on a vote of closure. However, 14 Democratic Senators abandoned ship and voted “yea” and made it impossible to filibuster it. One of them was Sen. Joseph I. Lieberman (D-CT), one of the Iraqi War Hawks. Lieberman then turned around and voted “against” the Bill to cover his you-know-what. [3] (For more detailed information on this issue, see an excellent analysis of the Bankruptcy Bill by David Swanson. He points out that the credit industry made a staggering $31.6 billion in profits last year. [4]

Not everyone, however, ran for cover on this vicious legislative attack on the poor, minorities, workers and the middle class. Ninety-two Law Professors filed strong exceptions to the Bill in a letter, dated Feb. 16, 2005. They pointed out to Sen. Arlen Specter (R-PA) and Sen. Patrick Leahy (D-VT) the following: “This Bill is deeply flawed and will harm small businesses, the elderly, and families with children…Some people do abuse the bankruptcy system,” they added, “but the overwhelming majority of people in bankruptcy are in financial distress as a result of job loss, medical expenses, divorce or a combination of these causes…” [5]

As an aside, here are some relevant questions for you to ponder: Where were those overpaid bureaucrats at the Washington headquarters of the AFL-CIO when this extremely important Bill was being debated? When, if ever, are they going to get off of their collective duffs and be the instrument of social justice promised by their illustrious founders? [6]

Thanks to the Center for Responsive Politics, we now know that the Finance/Credit companies were also taking care of their cronies in the White House and in the Congress with huge political donations. In the 2004 period alone, the Credit Cartel contributed $8 million to the Congress. About $3 million went to the Democrats and over $5 million to the Republicans. Oh, the top recipient of all the elected officials in 2004 from the Credit Cartel, why none other than George W. Bush himself! He took in a whopping $640,000. [7] Shouldn’t there be a law against this kind of unethical behavior?

Most societies around the globe have protected borrowers by “limiting interests rates charged by lenders.” Many of our states have usury laws on their books imposing caps on interest rates. However, all of that changed when the Supreme Court opened the floodgates in a 1978 decision, in the case of Marquette v. First Omaha Credit Service Corp. “Since then,” in the words of Lucy Lazarony of Bankrate.com, “these sky’s-the-limit rate policies [have] dominated the credit card business.” In Marquette, the Court held that a “national bank could charge the highest interest rate allowed in their home state to customers living anywhere in the U.S., including states with restrictive interests caps.” [8] So, what did the wise guys from the Credit Cartel do? They quickly moved their credit card operations to a state with liberal or no usury laws, like South Dakota. Bottom line: The consumer was left alone in the water for the sharks of the Credit Cartel to mercilessly tear them to shreds!

What can be done about this kind of massive legal robbery? Answer: The Congress can pass a usury law putting a reasonable cap on what these predators can lawfully charge in interest. It should take into consideration the obscene profits the Credit Cartel has been gouging out of the American people. The Congress should also repeal the latest bankruptcy law.

Remember in our Republic that the people are the source of all political power, but that fact is worthless unless they take action. Democracy isn’t a spectator sport! Let the people start a Petition drive tomorrow to compel Congress to put a reasonable cap on the interest rates and to repeal the new Bankruptcy law. If the people fail to act now, they will only have themselves to blame for allowing this monstrous financial rip-off to continue. It’s time to fight back!


[1]. http://msnbc.msn.com/id/6735877/

[2]. Baltimore Sun, 05/21/05, “Consumer Activist Oppose Bankruptcy Bill.”

[3]. http://montages.blogspot.com/2005/04/debtors-of-world-unite.html

[4]. http://www.blackcommentator.com/132/132_guest_bankruptcy_bill_pf.html

[5]. http://abiworld.net/bankbill/

[6]. http://www.socialstudieshelp.com/Eco_Unionization.htm

[7]. http://opensecrets.org/industries/recips.asp?Ind=F0

[8]. http://www.bankrate.com/brm/news/cc/20020320a.asp