As this process takes place, I have heard some local people say this whole credit system operates like the illegal loan sharks did on the streets in the big cities during the 40’s, 50’s and 60’s.
According to the definition given by Wikipedia “a loan shark is a person or body that offers unsecured loans at high interest rates.” Sounds like these credit cards companies of today as they give them out like candy to every body even our college kids.
Further down in the definition is the history of this illegal practice by the mob or street gangsters that would make you a loan for $100, let’s say, for which you would agree to pay back on the first of the month at a given rate. However, during the month the interest rate would go up ten or twenty percent before your payment became due. Of course the people had no choice but pay up or lose something. Thinking that if they paid up before the next payment was due it would be over but each time the loan shark would change the interest rate. The person was trapped in a vicious cycle of paying on a small loan with no legal remedy at their disposal. Today we have credit card companies changing the rate upward in the middle of payment on old charges without your knowledge. In the old days if you did not pay they would break your legs, now, they ruin your life with a bad credit rating. The entry also mentions the new payday lending industry located in low income and urban communities operating the same way only legally. You are forced to use them because no financial institutions are located in their neighborhoods, so they pay absorbent check cashing fees and payday advance loans, interest rates. What has happened in my opinion is the old loan sharks have educated their children in good universities as lawyers and financial managers, which now work for or own these institutions. In addition they have been elected or support people in congress that have legalized that which use to be illegal.
I am happy to see congress and the Obama Administration tackle this issue because it has been unfair for too many years. I used to get angry to go to a hotel and they would say I need a credit card or go to rent a car and asked do you have a credit card. Then try and check out by paying cash only for the response to be we don’t accept cash. They have everyone caught up in you must have a credit card if you travel. This new legislation would curb unfair and deceptive lending practices by: requiring card companies to give cardholders advance notice of interest rate hikes; ban retroactive interest rate increases on existing balances except where the cardholder is over 30 days late in making payment; stop tricks and traps that make cardholders incur rate hikes and pricey fees; give the cardholder more control over credit limits and prevent card companies from issuing cards to minors. We find in the book of Matthew and Luke where Jesus had to display his displeasure over money changers. He said you have made my house of prayer into a den of robbers. These money changers had been robbing the poor people, who for years could do nothing about it because those in power had sanctioned the activity including the religious institution in which they operated. Yes the credit card companies have made the credit card industry into a legalized loan shark business. Thanks to Obama and congress the rules will be changed.
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