I was watching the evening news last night and they had a story about credit cards. It seems a lot of people are no longer able to service them. In response, in hopes of getting at least something back on their bad loans, card issuing banks now often cut deals for a lot less than outstanding balances.
This is not a very surprising phenomenon, given the way the economy has tanked. Banks made an enormous number of foolish credit card loans because they thought they had gamed the court and legislative systems so cleverly that no matter how high their interest rates, and how numerous and unfair their add-on fines and fees, borrowers would have to pay up in full. What choice did they have, after all? Credit scores are now so important these days, and bankruptcy has been made so much more difficult.
Except things haven’t worked out that way. When medical bills and lost jobs forced many Americans to choose between food and servicing their credit cards, the banks’ cunning huge-profits-forever-by-screwing-borrowers paradigm flopped. Which of course should have been the conclusion of this TV report about the growing number of credit card loan settlements.
Except it wasn’t.
Instead, this report noted that to make up for losses generated by settlements, banks are raising rates for consumers still paying up in full and on time, cutting back these people’s borrowing limits, and charging even more numerous fines and fees. Some card users still paying in full and on time were interviewed saying how angry they are that deadbeats are causing them so much pain. And a bank spokeswoman piled on, claiming banks were forced to go after good payers because other people are not servicing their card accounts properly.
What conclusion might a viewer take away from watching this report? Not that banks long engaged in predatory lending practices that reduced millions of Americans to a state of debt peonage and now seek to lessen well deserved loses by abusing millions of other Americans. Instead, this report led viewers to believe that nasty deadbeat borrowers are hurting their more prudent and responsible fellows, as well as innocent lenders.
This reportage, in other words, turned victims into perps, and perps into victims. One can only hope that TV stations that produce such twaddle eventually wise up and accurately report who is doing what to who and why.