Obama has declared war on an enemy he deems to be more vicious than Islamic Jihadism, Venezuela’s socialist dictator Hugo Chavez, Iran, Russia, Red China, Communist Cuba or North Korea. In fact, so far he has done everything he can to sit down and talk nice-nice with each of those enemies, convinced that if we can only convince them to get along with a smile, everyone will be happier in the end for it because surely these enemies simply want a friend to talk to. But there is one enemy so horrid, so dangerous, so unable to be negotiated with - and an enemy so determined to bring down everything Obama and the Democrats love - that they have made their war against this enemy priority number one.
The enemy that the Democrats, led by King Obama, have set their sights on is Free Market Capitalism, a.k.a. The American Dream.
In order to accomplish a takeover of private industry, and to wage war against Capitalism without an uprising by the populace, Obama and gang had to convince America that the Left's war against Capitalism was not only necessary, but that somehow the free market system that has made this nation the greatest economic power in history for over two hundred years is somehow at fault for the latest dip in the roller coaster ride of the financial world.
I've heard that argument before, by the way. The Democrats waging war on Capitalism would have made fantastic party members in the Soviet Union.
Once the populace was convinced of the evils of Capitalism, the Marxists in the Democratic Party (and many of them in the Republican Party when Bush jumped in bed with the Democrats when he proposed his stimulus package) began their manipulation of the market by pumping bailout money into it, and placing controls over any industry that was stupid enough to accept any of the fiat money. Obama and friends dictated parameters to the banking industry, chastising them for handing out retention bonuses, and anything that made it look like they actually made any kind of profit. Of course, the pre-planning worked wonders. After all, convincing Americans that profit equals greed worked well when they began to demonize the oil companies so that people would become more jazzed about the inefficient "clean" energy industry that will inevitably increase energy costs, and drop our economy further into the toilet.
Now that Obama and the Congressional Democrats have sunk their fangs into the financial industry, and the American automobile makers, they have turned their attention to a new enemy: credit card companies. President Obama, today, voiced his support for legislation that would keep banking institutions from imposing higher fees and interest rates on credit card users, as well as demanding that terms be written plainly, as if the notices aren't plain enough as it is.
The argument, as with the mortgage bankers, is that such practices are predatory, and the actions by the federal government are in the interest of protecting the consumer.
The measure may reach the House floor next week, and swift passage is expected.
Opponents, however, state that not only are the proposals unnecessary because the Federal Reserve has already adopted a series of restrictions expected to go into effect next year, but that also such legislation would reduce the amount of lending in the market at a time when the economy needs it most.
A number of moderate Republicans have broken rank to support the measure.
The danger of price controls are not being taken into consideration. One of the basic principles of microeconomics is that price controls, such as what is being suggested in the measure, leads to shortages in commodities, including credit, and in the long run will harm ordinary consumers.
Rules proposed by Congress go beyond the Federal Reserve's restrictions, and sharp limits in the availability in credit may be the result. This is not a prudent move when the need to improve the economy partially depends upon getting credit flowing again.
The predatory practices that the Obama Administration and Congressional Democrats are zeroing in on are the raises in rates and fees given to customers that are not paying their payments on time, or at all. The cost of these practices, if the companies must cease their practices due to this legislation, will lead to the credit card companies spreading the cost around to all card holders, resulting in responsible credit card holders paying the price.
Sounds like what is happening in the mortgage bailout strategies, doesn't it?
Limiting risk-based pricing won't stop with the credit card companies. By enacting this measure, the responsible credit holders, even those that don't pay interest charges because they regularly pay off their balances, will lose out on the return of annual fees, as well as lose out on credit card rewards like airline miles, so that the companies can recoup the costs from the proposed bans on risk-based pricing. In the case of the airline miles, the industry will receive less customers for flights, further hurting the already struggling airline industry. Businesses, traveling less to conduct business, will in turn reduce the span of business they conduct, which will force them to downsize to cover the cost of lost productivity.
The credit card holders receiving these fees and increased rates knew what they were getting into, and decided to allow their credit cards to get beyond their control. Foolish consumers do not make lenders predators, nor give the right to the federal government to take control and further weaken an already struggling market. If there is fraud in the system, then the companies should be punished just as would be any fraud in any kind of business. By enacting "Nanny State" laws like what is being proposed by the Democrats, the economy will be further set back due to the lack of innovation in credit.
In the long run, such actions by a strong centralized government destroys individuality, and turns consumers into mindless automatons following the government's will. As Americans, we are individuals with talents and personal attributes that sometimes cause us to fail. I have the freedom to fail as much as I have the freedom to succeed. If I do something stupid, like allow myself to become a credit risk, it is nobody’s fault but my own, and I will have to learn to be more careful in the future if I wish to survive as an individual. Sometimes the road to wisdom and character hurts. Sometimes, in order to become winners in the long run, we must first be losers for a while. If the government takes away the consequences of poor use of credit, the market will suffer, and the populace will become a gang of unschooled dependents waiting for the government to tell them what to do next.
By allowing the federal government to take control of yet another private industry in this way, eventually, as with other companies the government has gained control of, the White House will begin to dictate terms to the industry. Company leadership will be hired and fired (or forced to resign) as Obama sees fit, and the industry will cease to be a private industry. Then, as the government gains more and more control, they will move on to the next industry. In the end, before it is all over, the private sector will shrink, and opportunity and liberty will die in the hands of big government.
-- Political Pistachio Conservative News and Commentary
Obama Pressures Credit Card Issuers on Rates - Stephen Labaton, New York Times