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Northwest Voices

Seattle Times letters to the editor

February 14, 2009 at 9:00 AM

American credit

Buying inexpensive ropes

Vladimir Lenin is reported to have once said, “The capitalists will sell us the rope with which we will hang them.” Eighty-some years later it looks like Comrade Lenin was nearly correct.

But, instead of selling the rope with which to hang ourselves, it appears we have bought so many inexpensive ropes on credit that we are strangling ourselves with debt.

Unfortunately for the communists though, since so many of their rope factories are having to close down now, they’re not quite sure what to do either.

— Dean Riskedahl, Issaquah

Still on the hook

We often hear people qualifying their comments on the current fiscal fiasco by admitting they are “no economist, but. …”

OK, well, I am an educated, professional economic analyst so I will try to put this in terms people can understand. This applies specifically to the ongoing banking bailout, but can be attached to the grand stimulus plan that has, apparently, passed.

Let’s say you send your kid off to college with a credit card to cover expenses. It has a healthy credit line and should do the job for the semester and then some. But, two weeks into the term, your kid calls you saying he needs yet another card because all the credit line has already been used up and he can’t even account for where most of it has been spent.

Now, do you blindly send him another credit card with another line of credit, while you’re the one still on the hook for the first go-round and have no idea where it was spent. Or, do you insist on some reasonable level of accountability?

When you make it personal, it becomes easier to understand what insanity taxpayers are being expected to sign off on here.

It’s quite indicative when people compare what’s happening now with the disastrous Jimmy Carter years, especially when Carter comes out ahead by comparison.

Stand by for continued erosion of the dollar’s value and incredible levels of inflation. Oh well, Obama’s right-hand man, PaulVolker, was in charge back in the Carter years too, so I’m sure he’s figured it all out by now.

— Mark Williams, Lynnwood

Arbitrary and capricious banks

I have read recently that some credit-card lenders are arbitrarily closing the credit-card accounts of customers in good standing simply because those customers have not used their credit cards frequently enough.

According to SmartMoney.com, “Most major issuers, including Chase, Bank of America (BOA), American Express (AXP) and Citibank, have been slashing credit lines and closing the accounts of those who don’t spend on their card regularly.”

The banks will claim, of course, accounts with zero-or-low balances and high limits are at risk for fraud — a totally bogus assertion. The real reason is when consumers are responsible and selective with their credit-card spending, banks do not make as much money from their usurious interest rates and fees.

Closing accounts in good standing can have significant, adverse effects on consumers’ credit scores because their debt-to-credit limit ratio is now higher than it was before the bank’s arbitrary and capricious actions. As a result, consumers will find it harder to obtain credit and, if they do, will pay higher interest rates.

Now, I realize banks are motivated by sheer greed and nothing else and will do anything they can to gouge consumers, but this is plain ridiculous.

These are the same greedy banks that have caused the worst economic crisis in 75 years. Now they’re not only perpetuating the crisis by refusing to lend money, but making it harder for consumers to borrow at a favorable interest rate.

Yet, the heads of these same banks sit in congressional hearings, where they brazenly state they are doing their best to help consumers and businesses borrow money and revive the economy.

In this situation, it seems almost criminal to penalize good customers for frugal spending by closing accounts with low activity, yet that is exactly what the banking industry is doing.

Please contact your congressmen and Sens. Patty Murray and Maria Cantwell, D-Wash., and demand they initiate, sponsor or support a serious congressional investigation into this practice.

Banks have done enough damage to consumers and the economy. It’s time to stop them!

— Winston Rockwell, Kirkland

Comments | More in Federal bailouts, Politics, Wall Street bailout

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