DECEMBER 28, 2007 --

The email receptacles of this writer -- inbox and bulk -- are filled, daily, with offers from debt relief agencies to solve credit  card woes.  Radio stations broadcast commercials  offering  similar relief.  LPR has concluded that 32% interest rates on credit card balances must be a boon to debt relief companies.  But how does debt relief work?

LPR spoke with one debt relief company recently. Apparently, the debt relief company negotiates with the credit card issuer and gets the debt reduced to 40%.  The issuer splits this with the debt reliever -- AND gets a 50% tax break out of the settlement.  This means that the issuer gets 70% of  the owed amount.  BUT, this 70% does not include what the issuer had been getting in usury from the cardholder.  

The cardholder pays the debt reliever a 15% fee, plus the 40 percent settlement negotiated by the DRC.

A very few questions come to mind.

Why won't the credit card bank just apply reasonable rates to its customers?

Why are credit card companies permitted to squeeze consumers for  windfall profits?

Is there a an introductory course at U.S. business schools called Greed Unrestrained 1a, with advanced courses including: Never Give Credit Card Holders An Even Break 101?   

Last week, LPR denounced current credit card practices are "unconscionable."  Another word also comes to mind: "monstrous." Who but a monstrous caricature drawn by a radical anti-capitalist would squeeze the people as do credit card company decision-makers?

LPR does not  have a good feeling about the agencies that, offering relief,  seem to encourage 1) the oppressive business practices of the credit card companies, and 2) the passivity of state and federal legislatures in dealing (or not) with unfair economic practices.

LPR clicksters: tell your state and federal legislators what you think about credit card companies running amok over economic fair play. To borrow from an observation of Justice Louis D. Brandeis in Whitney v. State of California (1927), the greatest encouragement for economic bullying "is an inert people."

P.S.:  LPR, July 2005, posted an article about credit card interest rates that reached 26.99%, noting that the media  ignores important aspects of this story.

An Associated Press article, December 23, noted that a growing number of  Americans are having difficulty meeting their credit card bills and also reported that interest rates exceed 30% -- considerably higher than they were two and a half years ago. A.P., however, did not connect the dots between difficulty of payment and the usurious credit card squeeze.  

NBC, next day, ran its annual Christmas Eve telecast of "It's a Wonderful Life,"  Frank Capra's perceptive, still relevant movie.

Perhaps credit card execs, if they watch the movie at all, cheer for the villainous Henry F. Potter, who believed crushing "rabble" was a sound business practice.   

LPR wonders: how long Potterism will  flourish at banks intent on the "ambitious sacrifice of the many to the aggrandizement of the few," until we regain our founder's legacy of free enterprise for the common good." and restore usury to its rightful place in the criminal code.

The unrelenting,  rapacious action of banks on credit card interest rates demonstrates, for LPR, the ongoing validity, on economic, as well as political, matters, of the warning of Justice Louis Dembitz Brandeis: "[T]he  greatest menace to freedom is an inert people."