Paulson and Bernanke to Revive Credit Card Lending
Wednesday November 12, 2008
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke (Credit: Chip Somodevilla /Getty Images
Paulson announced the funds will be used in a program being designed that will leverage private financing, expand the program to financial institutions other than banks, and address a freeze in the consumer credit market. The $1 trillion secondary market for credit card, auto and student debt has come to a standstill. This market normally provides the funding for 40% of these loans. The Federal Reserve may partner with the Treasury on the credit program.
Paulson does not want to expend funds to help unregulated financial institutions, meaning auto companies. Only $60 billion of TARP funds are left from the $350 billion allocated for this year:
- $40 billion went to purchase AIG preferred stocks,
- $125 billion to purchase preferred stock in the top nine banks
- $125 to purchase preferred stock from regional banks around the country.
Comments
Would it really be so bad if credit card credit were more difficult to obtain? Isn’t the fact that so many people are so far in debt that we’re in the financial situation we are?
If people only bought what they could afford, a financial landscape like we’re seeing today would be a great opportunity for people.
Prices have come down or stopped their climb, interest rates are low, consumers are being enticed with everything from perks to good service; perhaps that’s how it should be.
Many people, if not most, use credit cards for what they NEED versus what they WANT willing to pay the credit card finance charge. The issue is when banks MAY raise rates as high as 32% on a balance that was paying 9.99%. This issue is much more than a one or two sentence problem. Our representatives/government should consider:
1. regulating fees and finance charges (after all they are infusing our money into the financial industry)
2. regulation may include keeping rates at Libor + 2 (with 1 of the 2 going to the bailout repayment)
3. cap fees at $10 (versus $30+)
4. cap annual fee (if the card has one at $15/annually)
5. eliminate the lobbyist.
Others will have other, better solutions. I hope that they write their representatives and president. The problem exists, we need solutions.
Thanks for the forum.
I have decent credit but I had cancelled all my cards when trying to get out of debt. I am now free of all unsecured debt but I need to have a card so in the future I won’t be hurt by having no credit.
Here are some great tips for getting a new credit card from About.com’s Guide to Credit, LaToya Kirby.
Reestablish Your Credit
Kimberly
Great tips have to be followed in use of credit cards ,this may leads to extension limits and ineffective payments .