Credit Card Report
Financial News Made Easy

What started as a fairly simple three-page proposal giving the Treasury Secretary unchecked power to orchestrate a bailout of the country’s financial system ended up as a complex rescue package, with enhanced congressional oversight, some added protections for taxpayers and a slap on the wrist to highly paid, underperforming executives.

In the short run, congressional leaders have achieved their goal of producing an agreement Sunday on a federal bailout of banks and other financial institutions holding bad mortgage debts before the world’s stock markets reopened.

President Bush went before the nation last night to argue for his administration’s proposed $700 billion bailout of the financial system, which has been met with skepticism by some in Congress and the American public.

Two former employees of credit card issuer MBNA, now owned by Bank of America, said on Wednesday they were forced to use aggressive and deceptive practices with customers in order to boost revenues.

The bill would make it a lot easier for the humble consumer to get a fair deal from the credit card companies. It would eliminate a variety of tricks and traps of the credit card business, like retroactive interest rate hikes.

The White House said on Monday it opposes legislation called “the Credit Cardholders’ Bill of Rights” that would curb unfair and deceptive credit card practices, saying it would constrain banks’ ability to price risk.

Wall Street and the Bush administration’s record of financial oversight came under attack at the United Nations on Tuesday, with one world leader after another saying that market turmoil in the United States threatened the global economy.

The extraordinary nature of the outpouring on Tuesday was that it came from some of America’s closest allies and trading partners — not from those the United States would label political outcasts, but from mainstream countries in Europe, Asia and Latin America.

In the past two weeks, the government took over Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America.

If all that weren’t enough, the Federal Reserve announced late Tuesday night that it was loaning $85 billion to insurer American International Group.

None of this would have happened if the housing market had not imploded, leaving all these firms with staggering losses from their investments tied to mortgages.

On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing.

The audience seemed skeptical, even dismissive.

That was then. This is now.

The percentage of people who were delinquent on their credit card payments rose slightly in the second quarter from the same time last year, while average debt per borrower jumped 8.6%.