posted on Jan, 6 2010 @ 10:28 AM
I can understand the anger towards Bank of America. However, please remember that there are always two (2) sides to every story.
Credit card debt is unsecured debt, which means that there is no collateral held to protect the bank in the event of default. For example, if you use
your credit card to purchase a dinner at a restaurant for $100.00, the bank has no way to recover any collateral if you default on this debt
Unsecured debt is also considered a very, very high risk loan. And that's exactly what a credit card is - a high risk loan, with an ever increasing
likelihood of a high percentage of defaults in a severely distressed economy.
What we don't know is what triggered the bank to hike the interest rate.
Did the attorney lose his job and has been 90 days late on his other credit cards?
Did the attorney just borrow gobs of money that he can't afford?
Did the attorney do anything to increase the risk of default in the eyes of the bank?
Did he take out a whole bunch of new credit cards recently?
Did the attorney really make his payments on time?
Does the attorney have a past history of credit issues - tax liens, judgments, bankruptcies, etc.?
All this, we don't know. We don't have all the facts. So quit jumping to conclusions that Bank of America is at fault.
Obviously, Bank of America is sophisticated enough to use personal credit report monitoring to monitor the credit history of its borrowers. If there
are warning signs - such as tax liens, late payments on other debt, judgments, loan defaults - then Bank of America is perfectly justified in
protecting itself from default by increasing the interest rate and cutting the credit line - regardless of whether the borrower has "allegedly" made
his payments in a timely manner.
That's what smart banks do. They try to minimize their risk, and mitigate any risk with either more collateral (unavailable, in this case), a higher
rate (yup), or shorter terms (converting an interest only loan to a loan of principal and interest at a fixed rate).
Banking is a business, after all, not a Romper Room or a charitable non-profit. The borrower entered voluntarily into a legal loan contract, mind
you, willingly. He could just as easily have decided to pay for all of these credit card expenses with cold hard cash. He didn't. He elected to
pay his expenses with a high risk loan facility - a credit card. His choice.
This story reeks of a publicity stunt. Don't be so gullible.
I don't buy his story one bit. Never late on a payment? Sure. Sounds good to me. Why don't you back this claim by making all 3 of your credit
reports available for public viewing? Don't want to do that? Well, how about at least telling us what your credit score is? Oh, you don't want to
disclose that either? Not having credit issues? Uh huh. Whatever you say, sir.
This attorney is trying to play on the anger of Main Street against the bank bailouts - which are a completely separate issue from the attorney's
If he is a heightened credit risk, then Bank of America is doing the right thing by protecting its interests in the loan asset. Last time I checked,
Bank of America repaid all government bailout money, with interest mind you. And, according to the CEO's that accepted TARP funds, it wasn't an
optional choice either - They were pretty much told by Paulson et al that this was non-negotiable and that they had to accept TARP funds whether they
liked it or not.
The earlier post is correct - When borrowers default, everyone else pays for it. The losses have to be paid somehow, and so the losses are ultimately
passed on to the average consumer in the form of higher rates, fees, etc. Why should I have to pay for this deadbeat attorney that stiffs the
If the attorney had any iota of intelligence, he would consolidate this loan into a 4-5 year term loan at a fixed rate of principal and interest to
pay off the debt entirely. He would avoid using his credit cards except for emergencies.
Instead, he is opting for the publicity stunt. Promoting his "Entitlement Philosophy" where contracts are thrown out the window and anything goes
as long as you complain loud enough to the press. Not much can be said about the character of this borrower, other than he doesn't have any.
[edit on 6-1-2010 by CookieMonster09]