No Crackdown for Credit Card Companies

The bank manager looked so happy about giving us the bad news that I thought she was going to pee herself out of sheer glee.
“I’m sorry,” she said, looking up from our credit reports. She paused dramatically, relishing each word like it was a grape marinated in rum and honey, trickling off the tip of her tongue. “But... you... don’t... qualify... for a credit card.”
Big fakey sympathetic smile.
No VISA, no MasterCard, no nothin’. We were crushed. Two recent college graduates, with the prospect of good careers before us. But neither of us had much of a credit history to speak of, and back then, banks passed out credit cards with a grudging, iron fist. Or in our case, not at all.
My, how things have changed.
Today, I’m sure that skinny branch manager with the glittering eyes is shelling out credit cards to teenagers like fistfuls of confetti at an MTV Spring Break concert.
When I applied for my first VISA card years ago, I was a college graduate with a total of $300 in student debts to wrap up. That made me a bad credit risk back in the day. I didn‘t have a track record.
By contrast, today’s typical college graduate owes more than $20,000 in education loans, with nearly half of all students also saddled with credit card debts averaging $3,176, according to a website called www.debsmart.com.
Concern over debt and the reckless practices of credit card companies came up last week during the debate over new bankruptcy legislation that will make it harder for broke Americans to start with a clean slate.
There‘s a strong argument for reform: Bankruptcies in the U.S. have risen eightfold in the past 30 years; from 200,000 in 1978, to 1.6 million last year, according to the New York Times. And when someone declares bankruptcy, the costs of their bad luck or poor choices aren’t just eaten by the bank or creditors -- they’re passed along to us in the way of higher prices, higher interest, or hidden costs.
But no one in Congress is slapping the hand of credit card companies which are recklessly passing out cards to people who lack the maturity or common sense to own them.
For instance, more than one-third of all college students now own more than four credit cards. And it’s not unusual for 30-year-olds to be still paying for the credit card blunders they made as 20-year-olds, according to www.debtsmart.com.
Today, the average American family is somewhere between $7,000-$8,000 in credit card debt. And a University of Michigan study found that low-income families dependent on credit cards went from being $2,900 in debt in 1994 to $18,500 in 1999.
Then too, half of all personal bankruptcies are due to Americans being unable to afford their hospital bills, according to a Harvard University study.
So perhaps Congress will excuse some Americans for feeling that the new bankruptcy legislation is just a big wet kiss up the backside of those elements of the banking and credit card industry that promote reckless lending.
In fact, an outfit called the Consumer Federation of America claims that only 28% of Americans feel that President Bush should sign the new bankruptcy legislation. Perhaps most of us can imagine getting caught between a catastrophic health bill and our ill-advised VISA debts. What would you do?
“This bankruptcy bill is mean-spirited and unfair,” said Senator Edward M. Kennedy. “...It’s a bonanza for the credit card companies, which made $30 billion in profits last year, and a nightmare for the poorest of the poor and the weakest of the weak.”
It’s a shame this new legislation won’t apply the same lash to credit card companies that it applies to Americans. Isn’t it fair to share the blame?
In fact, many of us are showing more responsibility by turning to debit cards. One study claims that more Americans used debit cards than credit cards for purchases in the first half of 2004.
When I get home from work this evening, there will be a pile of new credit card offers in my mailbox. The credit card that was once denied me is now available by the dozens with little or no accountability required by the companies offering them.
I’ll think of the friends I have who’ve gotten up to $30,000 in debt to these parasites, or all the young people I know who’ve gottten into deep trouble because they weren’t aware of what it means to be forever in debt to a VISA or MasterCard, and I’ll throw all of those come-ons in the trash where they belong.

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