Bankruptcy law backfires on credit card issuers

[Vic]

Since when did a credit solicitation become a credit approval? Obviously, it is not nor could it become one, unless Mr. Slater committed fraud on the credit application.

I am not saying that ANY entity can do no wrong, but you people reveal more and more of your ignorance and bias with your every post. The fact remains is that borrowers must encouraged to pay back their debts as much as is possible and by force of law if necessary. Bankruptcy is an extremely fair system, better than any other in human history, that allows borrowers to be forgiven those debts they cannot actually pay back, when and if the need and justification arises. It is, however, a compromise, and like all compromises it is necessary to ensure that neither side abuses it. If you do not like the system, do not borrow. It is not necessary to do so to get by, there are simply advantages in doing so. With those advantages come risks and responsibilities. Get over it.

/thread

 

[Helenihi]

Originally posted by: BaliBabyDoc

Originally posted by: Helenihi
I don't see how that refutes the criticism. Exhibit 2 shows pretty clearly that all you needed was $1000 in medical bills to get filed under major medical caues or any medical cause. Citing the average bill still doesn't refute the fact that you're including people well under that average.


" Debtors? out-of-pocket medical costs were often below levels that are commonly labeled catastrophic. In the year prior to bankruptcy, out-of-pocket costs (excluding insurance premiums) averaged $3,686 (95 percent CI = $2,693, $4,679) (Exhibit 5). Presumably, such costs were often ruinous because of concomitant income loss or because the need for costly care persisted over several years. "

Well that's a nice assumption. Guess we'll just take that as a given rather than do a little more research to find out if it was ruinious because of income loss or if it was something unrelated to health care. We'll just assume everything agrees with our assumptions.

And I noiticed you didn't bold this part of the strengths and weaknesses.

"We cannot presume that eliminating the medical antecedents of bankruptcy would have prevented all of the filings we classified as ?medical bankruptcies.? i.e. We're not sure that everything we've classified as a medical bankruptcy actually is, but we're not going to bother to investigate further and we'll bury this disclaimer at the bottom of the study where no one will read it.

Curiously, I did NOT bold it but also did NOT OMIT it. The article is provided for your edification . . . sorely needed. Research is just that . . . research. One study doesn't answer all questions . . . sometimes they scarcely answer one. But the body of literature on the mediating effect of illness and injury on bankruptcy has indeed been advanced by Himmelstein et al. Peer-reviewed lit is obviously beyond you.

Assuming they can find funding for further study I'm sure Himmelstein et al will indeed dig deeper but their are so many variables at work and the complex interplay between them that "definitive" answers are going to be arduous to come by.

It's pretty obvious that you either cannot read or cannot comprehend. The Methods and Results of Himmelstein et al clearly note the type of illnesses most commonly listed and the common theme of interplay between illness, employment, and family issues.


Not to get too personal but you really have no concept of how most Americans live from paycheck to paycheck. Credit card . . . gradual. Children . . . gradual. Injury . . . precipitous. And naturally when injury or illness is chronic many people find themselves overwelmed.

Again, the $1000 requirement was used to have "some" criteria that would capture the millions of American households struggling to make ends meet . . . without being so low as to be useless. But it was just one of several criteria used. A fact lost on some.

In it's totality, it's easy for anyone familiar with illness and injury to understand the burden faced by these families.

I wonder how much $1000 hurts if this is all you earn?

And still you include pointless emotional arguments because you can't refute the substnace of the criticism. Its possible that $1000 can be a burden to someone with a low income (though that $1000 only is enough to force you into bankruptcy is ludicrous) but its also quite possible that $1000 is not a particularly large burden. And its not like everyone declaring bankruptcy has a tiny income.

Funny that you'd post that list, seeing as anyone who makes less than that amount is mostly unaffected by the new bill. But hey, why let reality get in the way of some good rhetoric.

I see if you've also taken the typical leftwing tactic of assuming everyone opposes you is rich and their opinions are therefore invalid. Truly a sign of someone with great arguments.

But hey, don't let any of that bother you. Just keep shouting "peer review! Peer review" and pretend that once something is published in a journal we all have to accept everything in it as gospel. Also keep pretending that anyone who criticizes the article, regardless of how knowledgeable they actually are, is some country bumpkin with no education.

 

[dmcowen674]

Originally posted by: zendari

Originally posted by: marincounty
Where in the constitution does it say that it is ok for corporations to screw the consumer?
I think it is the job of the SEC, the comptroller of the currency, ftc, commerce dept, etc., to protect the consumer and the country. Nice try, though.

They aren't screwing anybody.

The individual is choosing to enter into a valid and enforcable contract.

You fail to mention conveniently that the contract changes for the benefit of the Company at the detriment to the individual. Of course you feel that is right. :roll: :disgust: :thumbsdown:

 

[Darkhawk28]

Originally posted by: dmcowen674

Originally posted by: zendari

Originally posted by: marincounty
Where in the constitution does it say that it is ok for corporations to screw the consumer?
I think it is the job of the SEC, the comptroller of the currency, ftc, commerce dept, etc., to protect the consumer and the country. Nice try, though.

They aren't screwing anybody.

The individual is choosing to enter into a valid and enforcable contract.

You fail to mention conveniently that the contract changes for the benefit of the Company at the detriment to the individual. Of course you feel that is right. :roll: :disgust: :thumbsdown:

Yup, the CC company can change the agreement with 15 days notice. Jan 1, your interest rate is 6.9% and by Jan 16, you're looking at 22.99%. Nice little scam they have there.

 

[rchiu]

"Bankruptcy law backfires on credit card issuers"

Heh, yeah that's a suprise :disgust:. Stop talking about personal responsibility and how it's people's fault for not able to pay back the credit card bill or filing bankruptcy. The blame should be put squarely on the companies that issue credit card without doing the math and considering the risk.

I don?t know how many people here has an MBA/Finance degree, but most people know about investment and the risk come with the investment right? Issuing loan including CC loan is nothing more than a form of investment. And if you don?t do the math on risk/return and be greedy and take on risky investments, as a result you take a huge loss, do you blame the investment or yourself for the stupidity?

Further more, Credit card is a damn profitable business. Banks charge ppl 15%~20% APR for the balance ppl carry, and charge late fee of $20 for a balance of $10 that?s 1 day overdue. Don?t let the banks for one second fool you into thinking they are losing money cause of the bankruptcy. All the law they are trying to pass is aimed at INCREASING PROFIT. I for one won?t shed a tear when a law they pushed hard for their own greed backfire on them.

 

[zendari]

Originally posted by: dmcowen674

Originally posted by: zendari

Originally posted by: marincounty
Where in the constitution does it say that it is ok for corporations to screw the consumer?
I think it is the job of the SEC, the comptroller of the currency, ftc, commerce dept, etc., to protect the consumer and the country. Nice try, though.

They aren't screwing anybody.

The individual is choosing to enter into a valid and enforcable contract.

You fail to mention conveniently that the contract changes for the benefit of the Company at the detriment to the individual. Of course you feel that is right. :roll: :disgust: :thumbsdown:

That's also part of the contract. Have you read your CC agreement?

 

[Vic]

Originally posted by: rchiu
"Bankruptcy law backfires on credit card issuers"

Heh, yeah that's a suprise :disgust:. Stop talking about personal responsibility and how it's people's fault for not able to pay back the credit card bill or filing bankruptcy. The blame should be put squarely on the companies that issue credit card without doing the math and considering the risk.

I don?t know how many people here has an MBA/Finance degree, but most people know about investment and the risk come with the investment right? Issuing loan including CC loan is nothing more than a form of investment. And if you don?t do the math on risk/return and be greedy and take on risky investments, as a result you take a huge loss, do you blame the investment or yourself for the stupidity?

Further more, Credit card is a damn profitable business. Banks charge ppl 15%~20% APR for the balance ppl carry, and charge late fee of $20 for a balance of $10 that?s 1 day overdue. Don?t let the banks for one second fool you into thinking they are losing money cause of the bankruptcy. All the law they are trying to pass is aimed at INCREASING PROFIT. I for one won?t shed a tear when a law they pushed hard for their own greed backfire on them.

As a credit underwriter (mortgage) with a finance degree, my only comment to you is :roll:

 

[rchiu]

Originally posted by: Vic

Originally posted by: rchiu
"Bankruptcy law backfires on credit card issuers"

Heh, yeah that's a suprise :disgust:. Stop talking about personal responsibility and how it's people's fault for not able to pay back the credit card bill or filing bankruptcy. The blame should be put squarely on the companies that issue credit card without doing the math and considering the risk.

I don?t know how many people here has an MBA/Finance degree, but most people know about investment and the risk come with the investment right? Issuing loan including CC loan is nothing more than a form of investment. And if you don?t do the math on risk/return and be greedy and take on risky investments, as a result you take a huge loss, do you blame the investment or yourself for the stupidity?

Further more, Credit card is a damn profitable business. Banks charge ppl 15%~20% APR for the balance ppl carry, and charge late fee of $20 for a balance of $10 that?s 1 day overdue. Don?t let the banks for one second fool you into thinking they are losing money cause of the bankruptcy. All the law they are trying to pass is aimed at INCREASING PROFIT. I for one won?t shed a tear when a law they pushed hard for their own greed backfire on them.

As a credit underwriter (mortgage) with a finance degree, my only comment to you is :roll:

heh, and the next time you approve a million dollar mortgage without evaluating the guy?s credit rating or making sure the house worth that much, and the guy ended up defaulting on the loan and your bank can?t recover the money. Hope your boss will buy your argument that it's the guy's fault for being morally corrupted.

 

[Vic]

Originally posted by: rchiu

Originally posted by: Vic

Originally posted by: rchiu
"Bankruptcy law backfires on credit card issuers"

Heh, yeah that's a suprise :disgust:. Stop talking about personal responsibility and how it's people's fault for not able to pay back the credit card bill or filing bankruptcy. The blame should be put squarely on the companies that issue credit card without doing the math and considering the risk.

I don?t know how many people here has an MBA/Finance degree, but most people know about investment and the risk come with the investment right? Issuing loan including CC loan is nothing more than a form of investment. And if you don?t do the math on risk/return and be greedy and take on risky investments, as a result you take a huge loss, do you blame the investment or yourself for the stupidity?

Further more, Credit card is a damn profitable business. Banks charge ppl 15%~20% APR for the balance ppl carry, and charge late fee of $20 for a balance of $10 that?s 1 day overdue. Don?t let the banks for one second fool you into thinking they are losing money cause of the bankruptcy. All the law they are trying to pass is aimed at INCREASING PROFIT. I for one won?t shed a tear when a law they pushed hard for their own greed backfire on them.

As a credit underwriter (mortgage) with a finance degree, my only comment to you is :roll:

heh, and the next time you approve a million dollar mortgage without evaluating the guy?s credit rating or making sure the house worth that much, and the guy ended up defaulting on the loan and your bank can?t recover the money. Hope your boss will buy your argument that it's the guy's fault for being morally corrupted.

A million dollar mortgage with no credit evaluation or property appraisal? That absolutely never happens. Not even at the loosest lender. Which is why you got the :roll: from me. You have no idea what you're talking about. Not even in the slightest.

 

[rchiu]

Originally posted by: Vic

Originally posted by: rchiu

Originally posted by: Vic

Originally posted by: rchiu
"Bankruptcy law backfires on credit card issuers"

Heh, yeah that's a suprise :disgust:. Stop talking about personal responsibility and how it's people's fault for not able to pay back the credit card bill or filing bankruptcy. The blame should be put squarely on the companies that issue credit card without doing the math and considering the risk.

I don?t know how many people here has an MBA/Finance degree, but most people know about investment and the risk come with the investment right? Issuing loan including CC loan is nothing more than a form of investment. And if you don?t do the math on risk/return and be greedy and take on risky investments, as a result you take a huge loss, do you blame the investment or yourself for the stupidity?

Further more, Credit card is a damn profitable business. Banks charge ppl 15%~20% APR for the balance ppl carry, and charge late fee of $20 for a balance of $10 that?s 1 day overdue. Don?t let the banks for one second fool you into thinking they are losing money cause of the bankruptcy. All the law they are trying to pass is aimed at INCREASING PROFIT. I for one won?t shed a tear when a law they pushed hard for their own greed backfire on them.

As a credit underwriter (mortgage) with a finance degree, my only comment to you is :roll:

heh, and the next time you approve a million dollar mortgage without evaluating the guy?s credit rating or making sure the house worth that much, and the guy ended up defaulting on the loan and your bank can?t recover the money. Hope your boss will buy your argument that it's the guy's fault for being morally corrupted.

A million dollar mortgage with no credit evaluation or property appraisal? That absolutely never happens. Not even at the loosest lender. Which is why you got the :roll: from me. You have no idea what you're talking about. Not even in the slightest.

And so you think credit card companies keep offering credits to for example, college students without credit history, without actual jobs and got bunch of student loans then later complain that those students files bankruptcy for not able to payback the loan is reasonable?

You said it yourself that mortage companies never give out loans without proper evaluation. But you are saying credit card companies go by different set of rules and when they gives out credit without proper evaluation and later people default on them and it's the people's fault? Now who's the one not knowing what he is talking about?

 

[Vic]

Originally posted by: rchiu
And so you think credit card companies keep offering credits to for example, college students without credit history, without actual jobs and got bunch of student loans then later complain that those students files bankruptcy for not able to payback the loan is reasonable?

You said it yourself that mortage companies never give out loans without proper evaluation. But you are saying credit card companies go by different set of rules and when they gives out credit without proper evaluation and later people default on them and it's the people's fault? Now who's the one not knowing what he is talking about?

I'm not the one who said they didn't do the math or consider the risk. They do the math -- with algorithms that would make Einstein blush. Fighting as hard as they can to get as much of the money back as they can is an essential part of the equations. Like I posted earlier, if the goal was to eliminate all risk entirely, then no monies would be lent at all as that is impossible (even the best borrower poses a small risk of default, i.e. through unexpected personal tragedy). Would you prefer that? That no loans were made at all? At the same time, if lenders had no power to enforce the collection of the loans they make (either through credit history, repossession, foreclosure, etc), then risk levels would go so high that underwriting policy would tighten to the point where almost no one could get a loan.
What we have today is a reasonable compromise. When a loan is made and taken out, both parties, lender and borrower, assume a share of the risk and consequences of default.

 

[rchiu]

Originally posted by: Vic

Originally posted by: rchiu
And so you think credit card companies keep offering credits to for example, college students without credit history, without actual jobs and got bunch of student loans then later complain that those students files bankruptcy for not able to payback the loan is reasonable?

You said it yourself that mortage companies never give out loans without proper evaluation. But you are saying credit card companies go by different set of rules and when they gives out credit without proper evaluation and later people default on them and it's the people's fault? Now who's the one not knowing what he is talking about?

I'm not the one who said they didn't do the math or consider the risk. They do the math -- with algorithms that would make Einstein blush. Fighting as hard as they can to get as much of the money back as they can is an essential part of the equations. Like I posted earlier, if the goal was to eliminate all risk entirely, then no monies would be lent at all as that is impossible (even the best borrower poses a small risk of default, i.e. through unexpected personal tragedy). Would you prefer that? That no loans were made at all? At the same time, if lenders had no power to enforce the collection of the loans they make (either through credit history, repossession, foreclosure, etc), then risk levels would go so high that underwriting policy would tighten to the point where almost no one could get a loan.
What we have today is a reasonable compromise. When a loan is made and taken out, both parties, lender and borrower, assume a share of the risk and consequences of default.

Heh, you talk like the credit card business is fighting for their survival. But that cannot be further from the truth. Credit card industry is one of the most profitable industry in the financial segment, probably more profitable than your mortgage lending industry. That's why you see credit card solicitation mail every freaking day in your junk mail pile. If they don?t make money, you think they will try to lend more money to more people?

Credit card companies do their math, and they do it well. That?s why they have record earning every single year, even with people filing bankruptcy left and right. So if you really believe that the bankruptcy law is for the credit card companies? survival, or it?s about fair and justice, you are totally mistaken. This is just one more attempt by the credit card companies to boost their already fat profit margin. Credit card companies already factor in bankruptcy into their rate and fees. That?s why they have unregulated rates and fee that?s so much higher than any bank charges on the loans. The only thing that makes them lowering their rate is competition, and seeing how there are more competition now, they just get the government to push for this tougher bankruptcy law in hope to make more money.

I will believe the risk for the credit card companies is so high that it is tough for them to give out credit when I don?t see their solicitations anymore in my mail. But in the meantime, I will have to say they are making tons of money, and they are only looking to make more by all means possible, including this tougher bankruptcy law.

 

[Vic]

Originally posted by: rchiu
Heh, you talk like the credit card business is fighting for their survival. But that cannot be further from the truth. Credit card industry is one of the most profitable industry in the financial segment, probably more profitable than your mortgage lending industry. That's why you see credit card solicitation mail every freaking day in your junk mail pile. If they don?t make money, you think they will try to lend more money to more people?

Credit card companies do their math, and they do it well. That?s why they have record earning every single year, even with people filing bankruptcy left and right. So if you really believe that the bankruptcy law is for the credit card companies? survival, or it?s about fair and justice, you are totally mistaken. This is just one more attempt by the credit card companies to boost their already fat profit margin. Credit card companies already factor in bankruptcy into their rate and fees. That?s why they have unregulated rates and fee that?s so much higher than any bank charges on the loans. The only thing that makes them lowering their rate is competition, and seeing how there are more competition now, they just get the government to push for this tougher bankruptcy law in hope to make more money.

I will believe the risk for the credit card companies is so high that it is tough for them to give out credit when I don?t see their solicitations anymore in my mail. But in the meantime, I will have to say they are making tons of money, and they are only looking to make more by all means possible, including this tougher bankruptcy law.

Okay... first you said they don't do the math, now you say they do it well. Which is it?

And a credit solicitation is not a committment to lend. If you drive past a bank, and the reader board out front advertises the bank's rates, is that a committment to lend? Does that mean you're approved for one of the bank's loans? Of course not. Same thing with credit card solicitations.

And of course they make money. So does your local grocery store. If they didn't, they wouldn't be in business, and you'd probably be crying about the lack of credit availability.

 

[rchiu]

Originally posted by: Vic
Okay... first you said they don't do the math, now you say they do it well. Which is it?

And a credit solicitation is not a committment to lend. If you drive past a bank, and the reader board out front advertises the bank's rates, is that a committment to lend? Does that mean you're approved for one of the bank's loans? Of course not. Same thing with credit card solicitations.

And of course they make money. So does your local grocery store. If they didn't, they wouldn't be in business, and you'd probably be crying about the lack of credit availability.

Heh, let's see if you can tell the difference between "IF they don't do their math and get screwed on loans, it's their fault" and "They do their math well, which is why they make tons of money".

What I am trying to say with solicitation is that the amount of solicitation they do is the evidance that they make tons of money with their loans, with or without the tougher bankruptcy law. Using your own example, if your local grocery stores lose money on the item they sell, do you think they will try to draw more people to their store or do you think they will try to fix the problem first?

The whole point of my argument is that there is no lack of credit available, and there wouldn't be lack of credit available even without the tougher bankruptcy law. Because credit card company is making tons of money as it is. If the risk/return was against them, they wouldn't be making such big money, and they wouldn't be so eager to draw more customer, even those with high risk, like the students. Trying to get the bankruptcy law passed is just a way for them to make even more money on an already money making proposition, and I am glad that it didn't work out for them.

 

[zendari]

The credit card companies are making a profit? Oh noes, those greedy bastages!

 

[Engineer]

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

QFT...they are greedy bastards! :laugh:

 

[Meuge]

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

1. Credit company gives an unsecured loan to someone with a history of credit problems
2. The client overdraws and is no longer able to pay enough.
3. The credit card company raises his interest rates until he is no longer able to pay even the minimum payments.
4. The loan is in default, and the client declares bankruptcy.

According to you, by providing an unsecured loan the credit company does not assume any of the risk. I guess your absolute ignorance about even the most basic rules of economics shows here as well.

 

[rchiu]

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

Heh, there are those like you who love to take it up the you know what, waive all your consumer right and let the companies make as much profits off you as possible. There are the rest of us who prefer watching out for our rights and don't let big companies partner with big government and rape consumers the first chance they get.

 

[3chordcharlie]

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

Who here is saying that a credit card company capable of making good risk-assessments shouldn't be allowed to make a profit if they are able?

Do you even have a position, or is this just more masturbatory trolling?

 

[zendari]

Originally posted by: rchiu

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

Heh, there are those like you who love to take it up the you know what, waive all your consumer right and let the companies make as much profits off you as possible. There are the rest of us who prefer watching out for our rights and don't let big companies partner with big government and rape consumers the first chance they get.

There is no raping. You can choose to use a credit card, or not.

 

[zendari]

Originally posted by: 3chordcharlie

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

Who here is saying that a credit card company capable of making good risk-assessments shouldn't be allowed to make a profit if they are able?

Do you even have a position, or is this just more masturbatory trolling?

Liberals like rchio here like to dictate to companies that have a "fat profit margin" because they are somehow "greedy Greedy greedy!" and that they have somehow obtained "enough" profits (whatever that is) and shouldn't aim to increase them. Very amusing! :laugh:

 

[zendari]

Originally posted by: Meuge

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

1. Credit company gives an unsecured loan to someone with a history of credit problems
2. The client overdraws and is no longer able to pay enough.
3. The credit card company raises his interest rates until he is no longer able to pay even the minimum payments.
4. The loan is in default, and the client declares bankruptcy.

According to you, by providing an unsecured loan the credit company does not assume any of the risk. I guess your absolute ignorance about even the most basic rules of economics shows here as well.

Do you think collecting debts is free?

 

[3chordcharlie]

Originally posted by: zendari

Originally posted by: 3chordcharlie

Originally posted by: zendari
The credit card companies are making a profit? Oh noes, those greedy bastages!

Who here is saying that a credit card company capable of making good risk-assessments shouldn't be allowed to make a profit if they are able?

Do you even have a position, or is this just more masturbatory trolling?

Liberals like rchio here like to dictate to companies that have a "fat profit margin" because they are somehow "greedy Greedy greedy!" and that they have somehow obtained "enough" profits (whatever that is) and shouldn't aim to increase them. Very amusing! :laugh:

So your position is that there should be a free market for purchasing legislation?

 

[zendari]

Originally posted by: 3chordcharlie

Originally posted by: zendari
Liberals like rchio here like to dictate to companies that have a "fat profit margin" because they are somehow "greedy Greedy greedy!" and that they have somehow obtained "enough" profits (whatever that is) and shouldn't aim to increase them. Very amusing! :laugh:

So your position is that there should be a free market for purchasing legislation?

It is impossible to do so. Poor legislation will lead to such legislators being voted out by the people.

 

[3chordcharlie]

Originally posted by: zendari

Originally posted by: 3chordcharlie

Originally posted by: zendari
Liberals like rchio here like to dictate to companies that have a "fat profit margin" because they are somehow "greedy Greedy greedy!" and that they have somehow obtained "enough" profits (whatever that is) and shouldn't aim to increase them. Very amusing! :laugh:

So your position is that there should be a free market for purchasing legislation?

It is impossible to do so. Poor legislation will lead to such legislators being voted out by the people.

It hasn't so far - the bribes that are so charitably called 'lobbying' are used for re-election campaigns, and when an incumbent is defeated, the incoming representative is bought, too. Actually, for ranking positions, they have usually been bought several elections ago; that's how they funded the campaigns to reach a position where they matter.

My country has enough problems with corruption; yours simply has the best government corporate bribery can buy.