In one sense, this story is already well known, at least by virtue of its observable impact.  We have seen it in neighborhoods across America: foreclosures, short-sales, and a devaluation of property values.  Speculators and house flippers were understandably giddy over profits that seemed at the time, easy and never-ending.  But this period of exuberance did end, badly.  Those of us who are concerned with credit card company abuses, are paying the price.  Taxpayers are paying the price.  Investors from around the world are paying the price.

In essence, the mortgage industry sold “instant gratification” to buyers.  Yes, buyers “signed the dotted line,” and certainly, many knew (or should have known, if they lied about matters such as their income and obligations on “stated income” loan applications — that’s why the slang, “liar’s loans,’ came into being), that they too, were taking a risk.

Everyone was gambling.  But in common, the core belief that drove this scenario was the notion that housing prices would continue to rise.  Refinancing, to take “cash out” of real estate investment gains (or otherwise leverage the cash from appreciation in property values), enabled people to buy even more.  They used that money for anything under the sun: vacations, home improvements, adult toys (and “toy haulers”).

We now know this was a fallacy.  Anyone who may be watching squirrels gathering nuts on the ground for the coming winter can use this as an analogy for what many people did not do.  There are many adages which capture this failing, but perhaps the one (which in history seems to repeat itself) that best captures the miscalculation is this one: “What goes up, must come down.”

The “House of Cards” production does a great job of explaining, how we who are fighting credit card company abuses got where we are today.  Banks bought bad investments.  They want to recoup their losses by dipping into other sources of cash.  First, it was the bail out money: your money, and that of your children and grandchildren.  Second, it is every dollar and quarter, dime, nickel and penny, from fees, interest rate increases, and payment increases that banks can impose on the backs of people who still take pride in trying to pay their bills and fulfilling their obligations.  (But for how long?  Most people who walk away and “leave their keys on the counter” have simply given up, knowing that they can never pay.)

Obviously, the lax regulation that allowed Wall Street to profit and party on what we now know are toxic assets (I’m not an accountant, but it seems to me that a so-called “toxic asset” is a bad debt!) enabled a complex scheme with many participants to arise.

Unfortunately, as banks squeeze those of us who are still standing, more and more “able bodied borrowers,” including small businesses which account for much of our economy, suffocate.  Layoffs and fear have led to the destruction of consumer confidence — so spending slows to a crawl.  Here we are.

I personally found that one of the most interesting interview questions that was posed to various participants in the CNBC piece had to do with “feeling guilty,” for having been a part of this debacle.  The body language told a different story than the words that were uttered, slowly and carefully, in several instances, consistently along the lines of “just part of the food chain.”  Well, I already know where I am in the food chain: near the bottom.  However, when these banks try to “eat” what’s left of the rest of us, I want to make sure that we at least leave a very bad taste in their mouth.

Just a Few More Notes

This present post is very difficult to write.  I am separated from my family by virtue of real estate.  I have a house that has not sold, even though it is well cared for and in a decent middle-class neighborhood.  I have debts that are primarily associated with a decision to go to graduate school, trying to help others by becoming academically qualified to teach.  Those who walk away from their own homes (or who are forced to leave by eviction); those who enabled this to happen (see the documentary for the entire “food chain”); and I, along with my wife and children, are entangled.

Credit card companies (i.e., the banks that run them), are dealing with issues such as losses and liquidity pressures.  Nevertheless, because the banks are equivalent to “Goliath,” and we could be likened to “David,” naturally, ChangeInTerms.com and its supporters are in a position such that if we don’t throw “sticks and stones” to defend ourselves in any way that we can, we will be destroyed.

Sadly, I could be sympathetic to the banks’ problems, if they weren’t so mean and uncaring about what happens to others.  The most typical response to consumers (some of whom are the entrepreneurs we desperately need to nourish for a recovery) when they call to “negotiate,” just as appears to be the case with distressed homeowners, is that banks don’t want to work things out.  Rather, they just want to take everything that they can get, forcibly, mercilessly, and immediately, no matter what the consequences may be for individuals — and when taken in the aggregate — for the economy and this nation’s citizenry as a whole.

This behavior on the part of banks is sure to lead us all down a path to further destruction, I predict, unless we “work things out.”  How do we do that (those of us who are on the receiving end of banks’ callous, greedy, untenable dispositions)?  That’s really quite simple.  Anyone who has survived a schoolyard bully knows that the only way to prevail, is to make him or her very afraid of you.  If you are a small person, then you may need to assemble an army and gang-up on that bully.

I actually have a post in draft mode on the subject of “somebody should do it.”  Here’s what it boils down to: all of us “little people” must band together (this is a tiny example, but I sometimes get frustrated: why have I written several times, trying to get someone to print-out a free protest T-shirt, and send me a picture for the site?  Scared; too busy; afraid to raise a “stink” in public — I can understand all of these, because they describe me, but I still fight).

The formula for returning to a period of economic stability is also fairly simple.  Banks are in the business of taking in deposits, and lending at a profit.  Profits are a function of “time and terms.”  If they wanted to do it, they could institute all kinds of creative workarounds, because that’s what ends up happening in settlements.  Why they don’t want to work with people until the situation becomes such that a settlement is for “pennies on the dollar” (with the losses being shifted to those who are still standing, financially), is hard to fathom.  I suppose it’s because enough people have not has yet boycotted media for running credit card companies’ ads; written to affinity partners; threatened the reelection prospects of representatives; or gone “viral,” like the Debtor’s Revolt video.

If you aren’t willing to combine forces and join the fight, then you can count on being fleeced, beaten, and terrorized by such a bully.  We have already seen that this bully’s greed is insatiable.  I guess you’ll get involved once you’ve “lost your backpack and lunch money,” one too many times.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | One comment | Add to del.icio.us
Post tags: "Bail Out", banks, consumers, credit, credit cards, debt, economy, fees, interest, interest rate, regulation, small business

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We were always ready to show with an immaculate and well cared for home, “staged” and with all of the right fragrances, a shine on the appliances, and cleanliness otherwise, inside, under, outside.  We also cut the price: again, and again, and again, and again, trying to be competitive with the market.  Nevertheless, I have been working in North Carolina during the past academic year, and my family has been back in Tennessee.  My wife and I are “separated,” except by virtue of real estate, rather than by marital woes or choice.

The separation and commuting back and forth have been a little taste of hell.  This may also explain — as I have been paying “double” on housing costs during this period of time — why it is that when Chase sent its change in terms notice, it did make me “sick to my stomach” (Brian quoting me, and now me quoting him).

My father was a fighter pilot, and his being called away for military service while I was a child is something I still remember well.  Our situation (that of my wife, children, and myself) has not been that bad, since I’m not being shot at.  But it has certainly been challenging, nonetheless.  I thank those who are serving and protecting us in the military, now.

The aforementioned surgery was timed to coincide with a spring break the following week, and thanks to colleagues at Western Carolina University who have been extremely kind to me, I made some arrangements to fill in for an advising day and one of my classes during the week of the surgery itself.

After spring break was over, I backed out of my driveway in Tennessee, with my wife left essentially in the care of our two children.  I had pulled down everything we could think of from cabinets and closets so that food, towels, blankets, cooking utensils, toilet paper, and other necessities for their survival, camp-out-style, could be reached.  It’s not as though I was the one who had the surgery, but I felt terrible, leaving.

Brian impressed me greatly, not just as a journalist, but as a human being.  We spoke and emailed several times, and he regularly inquired about my wife’s recovery.  The first time we talked, he was immediately warm and conversationally generous — coming across as the kind of person I’d enjoy having as a guest at a back-yard Bar-B-Que (I love cooking, but my wife says I brag too much when I’m in the kitchen; nevertheless, I invited her for dinner for our first date over two decades ago, so you decide!).  Brian is also intellectually vibrant, and I enjoyed our talks.

Brian had nominated me as a candidate for one of the photos to be included in his article, which I now know is entitled, “About That New, ‘Friendly’ Consumer Contract” (April 30, 2009, online; May 11, 2009, print). At the time, I did not understand that the decision would be made elsewhere by editors, so I was scrambling for a tie and accessories, which I did not have with me in Tennessee when Brian was conducting his initial interview.

I tell you all of this to give you context.  I’ve been praised on this site for fighting Chase, and the abuses of credit card companies in general.  However, I’m just a regular person who like many others before me, is working hard to take care of my family, and trying to do right by others (such as students and credit card holders who are either consumers or small business owners).  At the risk of employing an old cliché, I put my pants on one leg at a time, just like anybody else.

I was generally very pleased with the article.  If it’s not clear by this point in my post, Brian Grow was very “decent” towards me and I appreciated the way he treated me during the interview process.  He’s a good guy.

I had hoped for a little less “about me” and a little more about the small business issue.  That being said, if the article directs traffic to the ChangeInTerms.com site, at least visitors may realize that my advocacy is “not so much” about me or any of the personal trials and tribulations that my family and I have faced (we consider ourselves very fortunate, in fact — my wife is much better at this point), but about the issue of abusive treatment of customers by credit card companies.

As can be ascertained from Brian’s article (page 3 of the Internet version), after several sickening months Chase did back down relative to my particular account.  Yet, I have not backed down, and I do not intend to do so, unless and until Chase issues a press release, and admits that it made a mistake relative to all account holders.

Brian was nice, when he stated that “abrupt changes have turned into a public-relations challenge for Chase.”  However, let’s be more direct.  “Chase didn’t admit any wrongdoing” (ibid).  That’s typical, but  the New York Attorney General flatly said that “Truth-in-lending laws prohibit this very conduct.”  Chase apparently even tried to infer that because “there were ‘no negotiations’ with Cuomo’s office,” that it was not engaged in wrongdoing.  I’d like to see this smokescreen cleared by suggesting that the most likely reason that there were no negotiations is because Chase was in violation of Truth-in-Lending-Laws.

I wanted to be a pilot like my dad; indeed, as a boy I dreamed of traveling even farther, in the space program (eyeglasses intervened).  Things don’t always turn out like what you may have imagined, hoped for, or planned.  But here’s what I do know now, credit card companies: with little or no provocation, you have attacked my former colleague, my wife, my former neighbor (an entrepreneur), me (and therefore my whole family), and millions of other undeserving account holders — consumers and small businesses.  Your lack of restraint is unprecedented, especially after taking bail out money and during a volatile time when we are all struggling in a weakened economy.  And we’re now banding together.

My dad used to quip the old pilot’s joke that “any landing you walk away from is a good one” (humor aside, I can understand that point of view; earlier jets were notoriously dangerous).  Well, abusive credit card companies (especially you, Chase): we’re going to “shoot you and your fancy corporate jets down” with anti-marketing missiles, alternative financing sources, lawsuits, and regulation that you royally deserve to receive after what you have perpetrated with such ruthlessness.  These actions against customers, orchestrated by scheming executives, whose only moral code is apparently unbridled greed, will end.

The next time you “kick me when I’m down,” you’d better make sure I’m dead.  I’ve been very “friendly,” thus far, and so have the vast majority of other account holders.  We’ve been paying our bills and meeting our obligations no matter what we have individually and severally been confronting in our own respective lives.  Therefore, abusive credit card companies, you’d better straighten up and fly right.

I recently celebrated another birthday (alone; I’ll be home soon for my cake, dear), and I’m old enough to not want a fight, but still young enough to declare to abusive credit card companies:

NOW I’M (STILL) COMING AFTER YOU

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 15 comments | Add to del.icio.us
Post tags: "Bail Out", advocacy, banks, change in terms, consumers, credit, economy, regulation, small business

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“The Board and the Reserve Banks share responsibility for supervising and regulating certain financial institutions and activities, for providing banking services to depository institutions and the federal government, and for ensuring that consumers receive adequate information and fair treatment in their business with the banking system.” (pg. 3)

Which “certain financial institutions” does the FED regulate?  Why it’s member banks.  That is, “national banks; by law, they are members of the Federal Reserve System.” (ibid, pg. 12).  Chase Bank, N.A., is a member, for instance.

Here’s where it gets interesting (and an inherent conflict of interest arises): ownership of stock.  How much stock, you ask?  “Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, half of which must be paid in while the other half is subject to call by the Board of Governors.” (ibid).

Putting it altogether, the FED is charged with “ensuring that consumers receive adequate information and fair treatment” from Chase (along with other member banks), which as one of the largest banks, is a major stockholder in the organization that regulates Chase.  Sweet, isn’t it?  Now do you see the conflict of interest?  No wonder Chase had its wishes for 18 months granted.  Big “compromise,” wasn’t it, that under the new FED Regulation Z rules, that banks will have to give 45 days notice before imposing changes?

In a statement before the U.S. House of Representatives in January 2009, Representative Dennis Kucinich criticized the FED system stating:

“The banks have shown that they can’t be trusted with the American economy.  That’s generally been the case, but now it’s out in the open 350 billion dollars later.  In 1913, the money power of the country was taken away from the people — by constitutional privilege it belongs with the Congress — but it was given up, in a Federal Reserve Act.  The Federal Reserve is no more ‘Federal’ than Federal Express!  But, yet it has the power to determine the direction of use of money in our economy.  If we could take that power back and put the Federal Reserve under Treasury, we start to be in a position, of being able to control monetary policy on behalf of the United States’ people.”

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 4 comments | Add to del.icio.us
Post tags: banks, consumers, economy, interest, regulation

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“We need to change the rules of the game” to make the credit card business more transparent, fairer and simpler for consumers, Geithner told reporters after the meeting at the Treasury Department. “This administration and this Congress are committed to changing the system.”

Reuters also reporting good news:

President Barack Obama will sign wide-ranging, pro-consumer credit card reforms into law by late May, senior U.S. House Democrat Carolyn Maloney predicted on Wednesday.

© RegulateNow for ChangeinTerms.com, 2009. | Permalink | 5 comments | Add to del.icio.us
Post tags: consumer credit, consumers, credit, regulation

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It’s a virtual certainty that if banks don’t want the regulation, it must be good for consumers.  When’s the last time a bank did anything in your best interest, as compared to their own?  When’s the last time that you received a change in terms notice that was good for you?  I’ll tell you when, most likely it was after a class action lawsuit was settled, or the bank was otherwise forced to take an action that was in your favor, as compared to being in the bank’s favor.  (I would place community banks and credit unions in a different category as compared to the big banks that monopolize the credit card industry.)

According to a CNN report entitled,  ”Obama to lean on credit card CEOs,” you may find it interesting to know just how badly the banks do not want consumers to enjoy additional legal protections:

The credit card sector gave as much as $7.3 million to lawmakers in both political parties during the 2008 election cycle, according to the Center for Responsive Politics. Since last October, Visa spent $1.7 million on lobbying, according to government lobbying registries.

That same report also stated, “if the bills advance all the way to President Obama’s desk, it won’t be without a fight.”  Banks are fighting for their interest, and not yours or mine, or those of small businesses.  Unless you are happy with the way things have been going (and how credit card companies have been treating you and others), now is the time to fight back.

We don’t have the money to ”buy” the votes of our Congressional representatives, but you should let them know that we expect them to finally act in the consumer’s (taxpayer’s) interest on this issue, instead of yielding to the will of a few corrupt credit card company executives and their lobbyists.  Be nice, but as far as I am concerned, a vote against these protections is a vote against the American consumer.  Contact your representative and those who are involved in the House and Senate versions of these credit card bills.  The House committee could vote as soon as tomorrow (Wednesday, April 22, 2009).

The only reason I don’t use the word “never” to describe when banks are on your side is to avoid violating the old adage, “never say never.”  Thus, try this phrasing, instead:

When there may be an occasional cold spell in hell, banks may be on your side, instead of their own.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 13 comments | Add to del.icio.us
Post tags: banks, change in terms, Class Action, consumers, credit, economy, interest, regulation, small business

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As we know, credit card companies are supposedly overseen by the OCC.  However, when complaining to the card issuer directly, the response that customers often receive is either condescension, laughter, or an answer that is strikingly similar to our current President’s campaign slogan, “YES WE CAN.”  This means that for all intents and purposes, credit card companies are not regulated by anyone. 

Thus, cardholders are regularly sent notices about changes that are too astounding to “believe in,” and find that they have no real recourse through any regulatory agency.  (I note that according to some stories I have observed, card company representatives seem to have no sense of fear whatsoever when a customer threatens to go to the OCC, and this threat may even invoke laughter — so much for the myth of oversight.)

This does not mean that no recourse whatsoever exists.  De-marketing is a very effective tool, even though it may take time.  And having no other choice, this has been my strategy in mounting a resistance to a Goliath such as Chase.  I would remind any reader that Chase “drew first blood.”  Chase finally pushed me way too hard, and crossed a line with its bullying of account holders that I simply refused to accept. I am now fighting for all account holders: 

If Chase wants peace, it can issue a press release.

Surrender terms include the demand that Chase must take back its egregious change in terms in its entirety, restoring every account holder to his or her previous condition – even the ones who “agreed at gunpoint” to give up their previously promised promotional rates; I also want an apology for defaming us (this isn’t all; read the linked post for more discussion).

With the above in mind, I find it interesting that according to a recently released report from a PEW Charitable Trust study entitled, “SAFE CREDIT CARD STANDARDS: Policy Recommendations for Protecting Credit Cardholders and Promoting a Functional Marketplace,” 100 percent of the credit cards it reviewed “allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers.”  The study’s assessment covered general purpose consumer credit cards from the largest 12 issuers (which control more than 88 percent of outstanding credit card debt in America), as of December, 2008. 

The purpose of the study (undertaken in partnership with the Sandler Foundation) was to “address growing concerns about abuses in the credit card industry.”  Accordingly, since the purpose of the ChangeInTerms.com site is to end the abusive treatment of account holders by credit card companies, I’m glad to see such a noteworthy organization take an interest in these abuses. 

Not that the PEW researchers contacted me, but I also feel vindicated in knowing that it too found “the overwhelming majority of credit cardholders are vulnerable to unfair and deceptive practices.”  For instance, “in a one-year period between 2007 and 2008, issuers used these powers to raise interest rates on nearly one quarter of cardholder accounts.”  These interest rate increases affected “approximately 70 million accounts” and generated “at least $10 billion in additional interest charges” for the banks from customers who were expecting to receive the deal the credit card companies promoted, which was altogether different.

The OCC appears to be impotent, and I expect this may be mostly because of what appears to be a very bank-friendly disposition on the part of Comptroller of the Currency Dugan.  He has stated that ”defining, prohibiting, or restricting particular product terms” is a “slippery slope” (see page 8 of the linked statement) that should be avoided.  He did go on to recommend opt outs, but “oops,” Chase did not provide one relative to its outrageously abusive change in terms issued in November, 2008 (which has been the subject of much discussion here).

In other words, regardless of an extraordinary range of ever-more egregious acts of abusiveness, let’s allow the banks to continue imposing “we can do as we damn well please terms” on account holders (and be smug about it — operating with impunity as they have been doing).   

The new FED rules against “unfair and deceptive” practices do not take affect soon enough (Chase wanted 18 months to comply with the new Regulation Z rules, but it thought its customers should only need 15 days to comply with its new rules).  Until then, banks like Chase seem intent on stepping-up the pace of these practices, effectively engaging in legalized loan-sharking, completely unfettered by any meaningful regulation. 

Banks’ recent behavior could be likened to a boxing match, when after the bell is rung they’re getting in a few more below-the-belt punches, mercilessly beating consumers (and small business owners).  No one seems to be talking about this, but even after the new rules kick in, enforcement will be necessary – it takes both laws and the enforcement of those laws for the rule of law to have any meaning.

In case you are wondering why I started this post with a discussion of the Consumer Product Safety Commission, it is because I have been intrigued with the notion of “product safety” relative to intangible products, like banking services and in particular, credit cards.  According to PEW, which made recommendations for a “safe credit card,” one key component is ”an opportunity to opt-out of any proposed change by closing the account and repaying it under the unaltered terms.” 

Since Chase’s change in terms does not include an opt out (despite testimony from its executives before Congress, which highlighted opt outs to illustrate the means by which Chase treated customers “fairly”), then we might also conclude that under PEW’s recommended product safety standards, Chase cards would obviously be deemed “unsafe.” 

As cardholders who have been defamed, injured, and otherwise “burned” by the Chase-branded product, we already know that using Chase products proved to be dangerous.  Therefore, to prevent any further “substantial injury,” I think Chase cards should be subjected to an immediate PRODUCT SAFETY RECALL. 

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 12 comments | Add to del.icio.us
Post tags: banks, change in terms, consumer credit, consumers, credit, credit cards, debt, interest, interest rate, notices, regulation, small business, Testimony

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The aforementioned Reuters report indicated a list of credit card industry representatives that may be involved, which was as follows: Discover Financial Services, Visa, Mastercard Incorporated, JPMorgan Chase and Co, Wells Fargo and Co, Citigroup Inc, American Express Co, Bank of America Corp, Capital One Financial.  If the banks do face any changes, I expect that they’ll whine that they need plenty of time to comply.  (Remember, Chase argued customers should only need 15 days to comply with its new rules, but it wanted 18 months to comply with new FED Regulation Z rules.) 

I note that an unnamed official was quoted to say the meeting is “basically just a part of our normal outreach to different groups to hear some of their concerns.”   A Capital One spokesperson said that “We have been invited to the White House.”  I’m also willing to bet that at the meeting these supposedly competitive company representatives will all get along with one another famously — they operate like a drug cartel, so I’m sure it will be one big happy family gathering.  Perhaps the White House chef will have some wine ordered in from the “old country” to serve with lunch (no fryer leg quarters with cream of mushroom soup for these invited guests).     

We already know that the theme on the part of the bankers will be the one we always hear: we have to manage risk.  But the reality is that what banks really mean (as evidenced by their actions) is that “if we can’t rate-jack and payment-jack account holders, and design card products with built in traps such that we can ‘have our way’ with customers [victims] any time we want,” we’re going to threaten that credit availability will suffer and costs will be higher.  And you know what?  I hope that when these banks later try to prove their point, it backfires on them and leads to a resurgence of community banks and credit unions.  Once gasoline prices double again (they will), we’ll all need to stay closer to home, anyway.

Somehow, in the minds of these bankers, they have grown accustomed to thinking that it’s “normal” and a valid “business model” to offer customers one set of terms, with the premeditated intent to change those terms into an altogether different proposition as soon as the account holder is “hooked.” 

In any other industry, this is called bait and switch, but with banks, they call it “managing risk.”  I do wonder how much risk all of those “clever MBAs and lawyers” working for these banks think is entailed in alienating a group of good-paying customers who have done nothing wrong? 

Of course, Chase has been the worst in recent times, using a blatantly coercive tactic to get customers to give up their previously promised promotional rates.  How does it help to manage risk, making payment terms so onerous (raising them to two-and-a-half times the previous rate) that customers can’t pay — literally pushing more and more American consumers into default?  These customers, already paid these banks once, by the way, with bail out money (so the banks want to double-dip). 

Well, I think it’s about time that our government did some “outreach” to “hear the concerns” that banks have created for consumers and small businesses, instead.   It’s ordinary working people, not banking executives, who are being massacred with an avalanche of change in terms notices by this group of thugs.  Hear some of mine (“Bob the Professor”):

1) Sooner or later, the bail out costs will come out of payroll deductions and increased fees and taxes on everything you buy: gasoline, cigarettes, car tags, property taxes, utilities, sales tax (have you noticed list of fees and taxes on your phone bill?). 

2) Your children and grandchildren are going to be footing the bill for this bail out debt, too. 

3) Talking about risk, I fear a new era of economic slavery (our ever-shrinking paychecks will be what’s left over after working for the government and the bankers most of the year). 

4) The problem that started this all in terms of consumer confidence and the tumble was the housing market (which has caused a year of separation/commuting in my family thus far); the bail out funds would have been less or perhaps not necessary at all if instead of bailing out banks, government had addressed the housing issue, first. 

5) Banks are knee-capping entrepreneurs – next to war or acts of terrorism, there is no greater risk to the possibility of an economic recovery, than that. 

Given that a significant portion of our so-called free press serves as nothing more than a mouth-piece for the financial services industry – as one of the most aggressive industries of all relative to advertising expenditures — I am also not surprised that reports about “invitations” to speak to Congress or the White House practically all include a “poor, poor, banks have to control risk” justification. 

Noting that Chase executives already lied about providing opt outs in testimony before Congress, I gather that there’s a good chance that they will not be held accountable by the media (or anyone else in our government) for whatever they say when they attend a meeting at the White House, either. 

Have you seen any significant coverage about these lies and misrepresentations with regard to the missing opt out despite the prior testimony in the major media?  Not me.  If I tune in to the national brand 24-hour news stations, it’s more likely that the story I’ll see 7 times in one hour is  ”a woman found an alligator in Florida.” 

Where’s the “Chase executives lied to Congress about opt outs” headline?

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 13 comments | Add to del.icio.us
Post tags: "Bail Out", banks, change in terms, consumers, credit, debt, fees, notices, regulation, small business, Testimony

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Thus, although I have been speaking on a few occasions with Jane Kim of the Wall Street Journal over the last month, I have only now been able to announce this on the ChangeInTerms.com site.  Jane’s article entitled, “Chase Retracts Unpopular Monthly Fee on Some Accounts,” has now been published (as of March 27, 2009) on the WSJ’s “Fat Wallet” personal finance and investing news site.  Jane was even courteous enough to email me and let me know exactly when the article was published. 

There is some very good news for those of us who have been affected by Chase, as indicated by the title itself.  However, even though we have won a battle, this war is still not over, and I am going to repeat something that I have already expressed to Chase:

“If Chase wants peace, it can issue a press release.”

In other words, while I have seen justifiable comments that are celebratory, and I am grateful to receive this breath of fresh air, this site shall leave no man or woman behind.  The war is not over until I see a headline along these lines: “Chase Retracts Entire Change in Terms on All Accounts.”  (As you know, if you are a regular reader here, I am especially concerned about account holders who may also be small business owners.)   

Further, I can still see elements of the same old Chase spin relative to some of the quotes from its spokesperson, Stephanie Jacobson.  For instance, the one about “changes were aimed at customers who had made little progress in paying down their balances, and affected less one-half of one percent of its customers.” 

Still making light of this and trying to minimize the number of customers, how severely they were treated (noting that “minimum payments due will remain at 5% of their new balance” — so much for bail out money), the fact that Chase’s aim was extremely poor — hitting numerous people who were paying more than the minimum — and defamatory toward responsible account holders by suggesting that they were “slow-paying laggards who deserved it” to members of the media, are we Ms. Jacobson?

I therefore shall now require more than a press release stating a rescission of the entire change in terms notice for all impacted account holders:

I demand an apology for the negative portrayal of myself as well as 399,999 other account holders. 

I’ll leave it to law firms to seek restitution and damages, along with punishment, if they can prevail in class action litigation efforts (which may take years).  In the meantime, this war will be won sooner, and with a longer lasting, more significant victory, if it is fought on a de-marketing basis.  I remember back in December 2008, after I installed the software and converted this site to a blog, I had only a few posts, and a few visitors, something like a half-dozen per day.  At this point in time, I am proud to say that I (and the people who have joined me) have now warned thousands of consumers and small business owners about Chase and its unethical shenanigans. 

Since Chase seems to be good at coming up with “alternatives” and “options” (instead of providing the opt out that its executives described in Congressional testimony, whereby customers would reject the change in terms and continue to pay under the old rates and terms), I’d like to present Chase with the “alternative option” of my own.  It might help in mitigating damages and possible punitive actions in “jury trial demanded” class action proceedings:

Chase could elect this “alternative option” by crediting the entire balances that its impacted customers presently owe, reducing their accounts to zero.  I’d like Chase to make “tremendous progress” in crediting these accounts, by doing so within 15 days. 

Why 15 days? 

Because as I observed here, although Chase wanted 18 months to comply with new FED Regulation Z Rules (surprise: banks got their way from their advocate and chief defender, uncle FED), Chase’s corresponding attorney argued that customers should only need 15 days to comply with its new rules. 

Why so much (crediting customers’ respective accounts the entire balance that they presently owe)? 

Well, it’s not really not that much.  You see, this would only entail zeroing out the balances of “less than one-half of one percent” of account holders.  Heck, it’s just such a small percentage, and Chase did receive $25 billion in bail out money (which we would like back before it gives that all out to executives in AIG-like bonuses).  Me, personally, I’d even forgive them for ruining Christmas.  Indeed, you could consider that amount to be extremely modest compensation for defaming people who were meeting their obligations faithfully, and fully. 

We good-paying customers who have done nothing wrong take our reputation and honor seriously, Ms. Jacobson.  Therefore, I’m afraid that this is only the end of round one.  Chase, this means that I’m not giving you an “opt out,” either:

NOW WE’RE (STILL) COMING AFTER YOU

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 7 comments | Add to del.icio.us
Post tags: "Bail Out", banks, change in terms, Class Action, consumers, credit, regulation, small business, Testimony

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Below is an interesting piece of proposed anti-usury legislation that you might want to contact your representatives about. It would override the rate abuses that have been made possible by the National Bank Act, that allowed credit card issuers to circumvent state anti-usury laws by locating in states that have anti-consumer laws like Delaware and South Dakota.

The piece also makes reference to credit unions, in that their rates have had a similar cap for years. One way to push back against all the abuses of the banking industry is to transfer your accounts to a credit union. A credit union is a not for profit financial institution, and when you become a member you also get a voting share. You are not a customer, you are an owner of your credit union. In the past, it was hard find a credit union, because most of them were limited to people who worked in certain professions, or for certain employers. Now, there are quite a few community credit unions that only require that you live or work in a certain geographical area.

Credit Unions typically offer free checking, no fee atms, and the gamut of loans from mortagages to cars, as well as credit cards. When you call and ask to speak to the manager, she comes to the phone, and sincerely tries to help. After all, she works for you! My credit union recently helped me get out of Chase hell. If you’re interested in one way to vote with your feet, use this link to locate a credit union in your area.

Credit Union National Association (CUNA)

_______________________________________________________

Washington, DC — In an effort to provide direct financial relief to tens of millions of American families, Congressman Maurice Hinchey (D-NY) today announced that he’s introduced legislation that would cap interest rates on credit cards and all other loans at 15 percent. The Interest Rate Reduction Act would rein in the skyrocketing rates that banks and financial institutions are charging customers with little or no warning and without any justification. U.S. Senators Bernie Sanders (I-VT) and Richard Durbin (D-IL) authored the bill and are sponsoring it in the Senate.

“For years, the credit card industry has taken advantage of hardworking Americans by finding any little excuse or reason to dramatically increase their rates, which only serves to drive those people further into debt and make them more dependent on the credit card industry,” Hinchey said. “The abuse exhibited by credit card and other lenders is a major reason for the economic hardships being felt in households all across America. A fair and healthy lending system is critical to the success of hardworking Americans and the recovery of the economy. This bill helps limit credit card and general lending abuse by placing a reasonable cap on the rates that can be charged to Americans. An interest rate cap gives the American people a legitimate chance to climb out of debt, enables lenders to still make a comfortable profit, and promotes long-term sustainable lending and borrowing practices.”

Hinchey’s legislation would impose a 15 percent interest rate cap on all loans at financial institutions. The bill would also impose a reasonable cap on lending fees, which have risen dramatically over the past decade. Importantly, the Federal Reserve could allow higher interest rates, but only under special circumstances when it determines that the 15 percent cap would threaten the safety and soundness of lenders and if money market interest rates have risen over the prior six months. These are the same rules that currently apply to credit unions, which have been forbidden from charging usurious interest rates on credit cards and other loans to their members for nearly 30 years. The interest rate cap has protected consumers at credit unions from being charged usurious interest rates, has not harmed the safety and soundness of these institutions; and has not negatively impacted the access to credit of credit union members. Furthermore, credit unions have been able to stay afloat throughout the credit crisis and have not received one dime of taxpayer assistance.

Credit-card debt in the U.S. has reached a record high — nearly $1 trillion. The average American household’s debt from credit cards has risen from $2,966 in 1990 to $9,840 in 2007. The debt crisis inundating so many Americans is partly the result of an industry with few regulations and little oversight. Consumers nationwide are facing excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit-card companies revise at will. In 2007, credit-card issuers imposed $18.1 billion in penalty fees on families carrying credit card balances — up more than 50 percent since 2003 and accounting for nearly half of the $40.7 billion in industry profits. Last year’s estimates were that credit card companies would break all records for late fees, over-limit charges, and other penalties, and pull in more than $19 billion.

© lyn for ChangeinTerms.com, 2009. | Permalink | 15 comments | Add to del.icio.us
Post tags: banks, consumers, credit, credit cards, debt, economy, fees, interest, interest rate, penalties, regulation

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On March 11, 2009, Kevin flew at at his own expense to testify in a Maryland hearing in connection with proposed bill against the practice of ”blacklisting” by credit card companies, in particular, American Express.  Kevin also took the time to visit other trade and regulatory organizations in Washington, D.C., to discuss increasing regulation for credit card companies.

Having had the opportunity to testify before Congress (and in Tennessee, before the Senate Environment, Conservation and Tourism Committee) myself, I can relate that it is an interesting experience.  Relative to my appearance on Capital Hill, I had little time to prepare my testimony, and I worked late into the night before the hearing, preparing the written remarks and then making copies at a 24-hour copy shop; there are really two parts to this, as one’s allotted time to speak is limited, but additional information and exhibits can be entered into the record. 

Navigating Washington from the point of view of getting around is not too difficult, as it has a great transportation system.  I would also remark that it is one of the most extraordinary places I have ever visited relative to pedestrian behavior.  As a visitor, I have noticed that on occasions when I was pondering a map, Washingtonians would typically come up to me and offer help.  In other cities, a visitor is often on his or her own.

So what is “blacklisting”?  To answer this, I’ll begin with an excerpt from Kevin’s testimony, detailing how it came to his attention in connection with an American Express account:

In October of last year, I received a letter from American Express informing me of a credit line reduction of $7,000, almost 65%. When I read the following reason given, in part, for the reduction, I was appalled.  The letter read: “Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.”  No where in my contract or terms with American Express was it disclosed that the delinquent actions of others would have a direct bearing on my credit worthiness.  Had I known this was the case, I certainly would have patronized another more ethical business. 

In other words, blacklisting is a practice whereby credit card companies profile card holders (using data-mining techniques), and categorize them by virtue of their purchases.  To me, this is reminiscent of some science fiction movies (coming to a reality near you), that depict one’s every move being tracked.  Factors such as where you shopped, and the company that holds your mortgage are used by credit card companies to make decisions about your credit (and in Kevin’s case, obviously, American Express took an adverse action against him, although he had done nothing wrong).

Even though the excerpt above refers to where one may have shopped, I am familiar with data-mining to the extent that I can point out an example of other intrusive (and discriminatory) techniques that could easily be associated with this.  Have you ever gone to a grocery store with a cartload of items, and upon checking out received a coupon for your next purchase?  When our children were younger, and my wife and I were buying diapers, our coupons were often for related “baby items,” such as formula.  The technology that allows for this is associated with data-mining.  Algorithms predict what one is likely to buy next, based upon what has been purchased already.

Next, credit card companies may decide that you went to a drug store, bought a prescription and are therefore associated with a supposed “increased risk” — must be sick; great time to raise interest rates or fees, and ”kick ‘em while they’re down.”

Maryland State Representative Saqib Ali introduced House Bill 1292 Consumer Protection – Blacklist Prevention,” to stop this practice in that state, and it is hoped that it will serve as a model for other states that may follow.  I applaud Kevin (and the Honorable Saqib Ali and colleagues with the Maryland House of Representatives, Economic Matters Committee) for fighting yet one more form of abusiveness on the part credit card companies.

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 4 comments | Add to del.icio.us
Post tags: credit, fees, interest, interest rate, regulation, Testimony

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