St. Louis Oracle

St. Louis-based political forecasting plus commentary on politics and events from a grassroots veteran with a mature, progressive anti-establishment perspective.

Sunday, May 24, 2009

Big banks’ ‘briar patch’ strategy

Remember the Uncle Remus fairy tale in which Br’er Rabbit pled to his captors not to throw him into the thorny briar patch, the very place the conniving rabbit wanted to be all along? Representatives for big banks seemed to have that tale in mind when they cried crocodile tears and warned of disastrous consequences if Congress passed the so-called credit card reform bill.

The banks got their secret wish last week when Congress passed the bill and President Obama quickly signed it into law.

The bill was dressed up with seemingly consumer-friendly features like eliminating over-the-limit charges and a few other no-brainer reforms that even most Republicans supported, like advance notice of rate increases and prohibiting abuses like double-cycle billing and universal default. But some of the bill’s provisions were already scheduled to go into effect anyway by order of the Federal Reserve. Congress and the President merely jumped onto the moving bandwagon and claimed credit.

As a whole, the bill is a Trojan horse that will hurt consumers and give the banks the cover they need to make even more money at our expense. The bill left untouched the banking industry’s single largest abuse, its right to charge usurious interest. Banks locate their credit card operations in South Dakota because that state has no usury laws, and other states are helpless because the legality of the charges is determined by the law of the state of the lender, regardless of where the consumer lives or the transactions take place. Congress could have changed that, but didn’t. So, every charge that banks will no longer be allowed to levy will be made up by higher interest.

The bill also provides cover to the banks to deny credit to young consumers by prohibiting them from issuing a card to anyone under the age of 21, unless the application is co-signed by a parent or guardian or proof of ability to repay the debt can be supplied. The briar patch, indeed! Congress has imposed its elitist judgment that 18-20 year olds who can vote, drive, go to war and carry a gun are somehow incapable of making a decision about getting a credit card! It means that young people will now have to delay building up their credit. Obama and congressional Democrats hosed the very voters that supported them the most!

And let’s not forget the unrelated rider that got enacted with the bill, allowing people to bring loaded guns into national parks and wildlife refuges. Hmm, endangered species and hunting rifles. What could possibly go wrong there?

Of course, the bill’s biggest problem is its impact on our vulnerable economy. Banks will clearly extend a lot less credit, especially to the very people who need it the most. People will buy less, so businesses of all kinds will sell less, and real people will lose their jobs. The recession will get worse instead of better.

But the banks will be sitting pretty.

Sunday, May 03, 2009

RIP, Compassionate Conservative

Former President George W. Bush coined the term "compassionate conservative" when running for his first term. It turns out he never was compassionate as most of us understand the term, and his administration's moves to nationalize banks with its TARP program also undercut his claim to have been conservative. Bush has ruined the brand for the foreseeable future.

Yesterday, the nation lost a political figure who really was a compassionate conservative, long before Bush claimed the moniker. Jack Kemp was a conservative's conservative. He and former Delaware Sen. William Roth were the political parents of Professor Arthur Laffer's "supply side economics," now better know as Reaganomics.

But unlike the stereotype conservative who glorified greed, Kemp really was compassionate. He cared about the poor and the consequences of policy on the underprivileged. While his star power as a former NFL quarterbacked certainly helped, what really got him elected (and reelected 8 times) as a Republican from a blue-collar district in industrial Buffalo, NY, was his sincere concern for working families. He sought conservative solutions to real problems.

Kemp championed the empowerment of disadvantaged people. He favored and encouraged tenant management of public housing, and spotlighted local leaders in that effort (including St. Louis' own Bertha Gilkey). Many of us forget that the purpose of his precious Reaganomics was to increase market-driven employment for low-income people. We can debate whether it worked, but it was clear that Kemp's heart was in the right place.

Jack Kemp was a worthy adversary. He will be missed.