Discussion in 'Economics' started by JamesL, Oct 18, 2011.

  1. JamesL


  2. Deregulated out of existence. From wiki:

    Each U.S. state has its own statute which dictates how much interest can be charged before it is considered usurious or unlawful.

    If a lender charges above the lawful interest rate, a court will not allow the lender to sue to recover the debt because the interest rate was illegal anyway. In some states (such as New York) such loans are voided ab initio[36]

    However, there are separate rules applied to most banks. The U.S. Supreme Court held unanimously in the 1978 Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp. case that the National Banking Act of 1863 allowed nationally chartered banks to charge the legal rate of interest in their state regardless of the borrower's state of residence.[37] In 1980, because of inflation, Congress passed the Depository Institutions Deregulation and Monetary Control Act exempting federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. This effectively overrode all state and local usury laws.[38][39] The 1968 Truth in Lending Act does not regulate rates, except in the cases of some mortgages, but it does require uniform or standardized disclosure of costs and charges.[40]

    In the 1996 Smiley v. Citibank case, the Supreme Court further limited states' power to regulate credit card fees, extending the reach of the Marquette decision. The court held that the word "interest" used in the 1863 banking law included fees, and, therefore, that states could not regulate fees.[41]

    Some members of Congress have tried to create a federal usury statute that would limit the maximum allowable interest rate, but the measures have not progressed. In July, 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act, was signed into law by President Obama. The act provides for a Consumer Financial Protection Agency to regulate some credit practices, but does not have an interest rate limit.[42]
  3. You should not be surprised at this. Deregulation of the financial sector has been the goal of the political leaders of this country (including WallStreet/Banks) for a long time. This serves one purpose and that is to make sure the few that are in power maintain control of this country and keep it till they die or pass it on to their family/buddies. The good of the commonwealth has been forgotten and the elite have proven they will do anything to keep their status even if it means blowing up economies and destorying everyone else's wealth.

    Debt of the majority is necessary to keep the minority in power. As long as one is in debt, they are a slave to the system and typically because people are too ignorant to see it or don't have enough will power to break out of it, they will stay this way, and teach their posterity as such.
  4. dtan1e


    this is quite true, considering that u see them pressuring all the EU smaller countries from Greece to so on to accept one loan after another
  5. Imagine everyone in the country just stopped paying their student loans, credit cards, auto loans, and mortgage.
  6. Aside from the auto loans I would call that a REAL bail out.
  7. Bob111


    APR on my BJ's CC. i have no idea,what default rate would be. and my FICO score is >800 :p
  8. If the card holder has a 50% probability of default (conditioned on his no longer paying his bills), then isn't 49.9% a rather reasonable rate to charge?

    Why does emotion some how always come into these things...

  9. Pekelo


    ...then no sane bank should provide him credit.
    #10     Oct 27, 2011