We Need Less Credit

Unfortunately, when you buy a meal or DVD or pants and end up paying and paying and paying no one except the bankers benefit.

I’m in a pissy mood tonight, so let me vent about another thorn in my side. Have you read the threats from the credit card industry? That’s what they are–threats. They don’t like the recently passed credit card legislation and are throwing a financial hissy fit.

From The New York Times: “Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.””

Yeah–take that consumers! They threaten to raise fees and cut accounts. Shhh… they are speaking like a monolith and forgetting there is (supposed to be) competition.

OK, here’s the deal. When folks pay a significant portion of their weekly income in interest and fees as opposed to using it for things they might actually need, we’re all getting screwed.

Some credit for durable goods purchases makes sense. Car loans and mortgages seem like reasonable uses. Unfortunately, when you buy a meal or DVD or pants and end up paying and paying and paying no one except the bankers benefit.

Though it will be a temporary inconvenience, we need less easy access to expensive credit, not more. We need more money spent going toward paying for things, not paying for fees and interest.

Addendum: Ron Lieber writing in Wednesday’s Times agrees with me competition will keep banks from raising fees

I’m More Pessimistic About Hurricanes

Recently I was interviewed for an article in Business New Haven concerning hurricanes. I’ve linked to the text.

Over time I’ve become more pessimistic of what might happen in a repeat of the hurricane of ’38 scenario for Connecticut. There would be little time for warning and difficulty explaining where the damage might occur.

Even in 2005, a tragedy seems unavoidable. That’s not what I want to say, but it is a realistic expectation.

I’m glad to see, though Dr. Mel Goldstein and I were interviewed separately (I didn’t even know he had been interviewed), we are in agreement with our concern.

Unlike Katrina where good advice was ignored, I’m not sure what we could do today to help prepare us for a hurricane approaching us at 60 mph. The entire East Coast would need warning. What good would that do?

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