posted on Dec, 24 2007 @ 12:13 PM
Apc, there are two sides to every coin.
Debtors should have been responsible when taking out all that debt. On the other hand, The idea that creditors had the right to set interest rates
whatever they feel like after the original loan has begun to be paid, is a new one in American banking. It used to be illegal to change the
rate on a loan without the other party's consent. federal law forbade this, as did most states until the early 70's. Even then, most states had a
limit to how much the rate could be changed from the original rate.
There was a time when any interest rate over 12% was considered usury, and the loan was legally forfeit (repealed in Texas in 1978). That's why loan
sharks had to break legs to enforce their loans in the old days.
But thanks to bribes and kickbacks to the House and Senate Banking committees, that's all a thing of the past.
The latest wrinkle is that creditors can change your interest rate based on your credit rating. In other words, if you miss a payment to one
creditor, once, the rest of them can raise your rate even though your are not late with "their" payment.
Citibank came up with this, because they noticed that debtors wobble before they fall down, and they try to collect as much as possible before you
collapse. All the other banks followed suit, and I've heard that GM does it too now---if you are late with your credit cards, they will jack up
your car payments to extract maximum dollars before they repossess.
The trouble is, the banks have the best lawyers in America on their side, and years of special interest legislation in place. The average consumer
doesn't stand a chance when they borrow money.
One of my dreams is, when/if my personal wealth ever passes 10 million, is to open a personal, non-profit, bank and insurance business. I'd give out
home loans and credit-payoff loans at 7%, and also offer gold-backed "investment notes."
I'd also offer non-profit car insurance, with no advertizing; just word of mouth.