I think you should learn what the CARD Act actually entails.
First the Act prevents raising interest rates arbitrarily. It does not prevent raising interest rates.
Ill repeat, it does not prevent raising interest rates.
I've read the legislation (PL 111-24) and it contains a categorical prohibition on increases for annual percentage rates, fees, or finance charges applicable to any outstanding balance subject to four narrow exceptions. Critically, none of the exceptions deals with a credit card issuer responding to a change in a borrower's riskiness. Taking your example, suppose Issuer gives a card to X with a 5k limit and 12% interest rate. This rate is calculated on Issuer's assessment of X's riskiness at the time Issuer opens the account with X. Further suppose that a few months pass (during which time X has amassed a 3k balance) and X starts burning through cash. From the standpoint of the issuer, lending to X has become a lot more riskier. I think in the context of unsecured debt it is important that he Issuer have the opportunity to re-price the risk by changing rates; whereas a secured creditor can include covenants and other measures designed to control the debtor and prevent that debtor from rapidly expanding their debt, this option is not available to the unsecured lender and re-pricing the risk is really the only tool available to the unsecured lender. When you take away this tool, you're really just shifting the costs associated with the borrower's increased riskiness to the lender's other borrowers or new customers (who won't get access in the first place).
I'm much more sympathetic to limiting or controlling punitive penalty fees and the like -- as the predatory aspect is much more salient -- but, unless my skills of statutory interpretation have completely failed me I do think that the CARD Act prohibits a lender from re-pricing risk.
Just because you work to undo the intentional work by large corporations to restrict information and choice by consumers does not mean you think consumers are stupid.
My comments were more based on some of articles Ms. Warren has written along with other some others -- including the article to which I linked -- on the subject of consumer protection.
It is not that I don't deny that people might have limitations or biases that militate against their best interests and that unscrupulous market participants may leverage these shortcomings for their own benefit. My problem with the government assuming such a paternalistic role is that it reduces individual liberty and has the real danger of creating unintended consequences. For what it's worth, I am not entirely opposed to libertarian paternalism model advanced by Cass Sunstein and think it might offer a somewhat workable middle ground.
What exactly is the difference between a payday lender and a criminal organization?
To be sure, there are some similarities. All things being equal, however, if I were in a situation where I needed to turn to turn to such a lender, I would much rather get a loan from CitiFinancial rather than my local loan shark. Sure, I'm going to get ripped off either way but at least with CitiFinancial I can be relatively sure my kneecaps will remain intact in the event I fail to repay the loan.
In the clip she talks of the factory owner utilizing roads and educated workers which come from federal funds. Police are also partially federally funded. If you recall, Clinton passed a bill to put 100,000 more cops on the street, provided by $200M in federal grant money.
Although I would still contend that the vast majority of funding for fire/police doesn't come from the federal level, I'll concede I was wrong -- my apologies.
If you are trying to look at taxes paid you should also be honest and show how much earnings and/or wealth those groups have. Anything else is just a talking point without substance.
I think this might be a valid criticism if I were suggesting that the other 47% ought to pay income taxes. The point I was trying to make, however, is more modest. Specifically, I was simply pointing out that 'the rest of us' referenced by Ms. Warren couldn't be that large a group given the aforementioned numbers. I wasn't arguing one way or the other as to whether the other 47% ought to pay income taxes.
Unless you actually have something from her where she makes it clear that entrepreneurs do nothing for ordinary people you are just making a pitiful strawman argument in response to things she "overlooked" during a 2 minute video clip.
The concern I had with her speech is that her focus seemed solely on suggesting that the wealthy currently do not pay their 'fair share' in taxes and that they had an obligation to do so. I was raising the point about ancillary benefits accruing to ordinary people because I am of the opinion that the knock-on effects originating from economic activity are far greater than any benefit afforded by government programs or the like (especially when so much federal money is either not spent on the beneficial programs she mentions or is spent poorly (as in the case of education spending). I understand that the nature of her speech might have prevented her from providing a full explication of the subject but my reaction was informed both by the content of her speech along with some of her other speeches, testimonies and articles.
Also, to be clear, it's not that I doubt Ms. Warren's sincerity or the conviction with which she pursues her ideals, viz. I don't think she is some crazy communist intent on bringing down the Republic. Rather I think she often underestimates -- or even ignores -- the costs associated with government intervention and she is also blind to the unintended consequences that result from government regulation. The harm the minimum wage does to minorities and the less-well educated springs to mind immediately. To quote Hayek, "
s there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?".
In simplistic capitalist terms, a buyer and seller meet in the middle where everything is balanced. When you have huge multinational corporations with tens of thousands of workers and billions in revenue, it throws that balance off. An individual cannot fairly compete with that. The only recourse an individual has is through the government, as corrupted as it may be.
This would be the case where there is only one supplier of goods and the consumer must either forgo purchasing the product offered by the multinational or accede entirely to the multinational's terms. I would contend, however, that where there is competition between firms -- even large multinationals -- then there still exists the conditions necessary for a healthy market, viz. if multinational 1 does not present fair terms to the consumer they can turn to multinational 2; if both 1 and 2 collude to frustrate the consumer then all is not lost because, assuming no technical barriers to entry, upstart X can enter the fray and offer the same goods and services offered by 1 and 2 but at more reasonable terms. At one point in time Kodak was a huge multinational but they failed to continually meet the demands of their customers and now they are an also-ran.