From Sen. Chris Dodd--Republicans Block Dodd’s Effort to Immediately Stop Credit Card Rate Hikes:

Senate Republicans blocked Banking Committee Chairman Chris Dodds (D-CT) attempt to pass legislation to stop credit card interest rate hikes.

Dodd went to the Senate floor to ask for consent for the Senate to take up and pass his Credit Card Rate Freeze Act, which would prevent credit card companies from hiking interest rates, fees and finance charges on customers existing balances until Credit CARD Act protections take effect in February. Regrettably, Republican Senator Thad Cochran (R-MS) objected to Dodds request, blocking the bill from Senate passage.

Consumers obviously have a responsibility to spend within our means and to pay what we owe. We bear that responsibility. But the credit card industry as well has a responsibility to deal with their customers honorably. There is nothing honorable about whats happened with these significant rate increases and fees. Most importantly, they dont have a right to rip off American families, especially when the Congress has already gone on record opposing the very actions they're engaging in, Dodd said on the Senate floor.

Happy Holidays from the GOP.

John Amato:

This is outrageous. The Republicans are actually blocking freezes on credit card rate hikes as the holidays approach us? What would Santa say? Where's the outrage from the Democrats and the Villagers? Will David Broder write a juicy article showing his disdain for the treatment of the American people by republicans? I mean he's the ultimate bipartisan scold. I bet if you asked the teabaggers waiting to see Sarah Palin at a book signing, they would say that it's un-American and Socialist to stop credit card companies from raising their rates. "That's their right as Americans if you support freedom and the Constitution." Maybe Palin will write something about it on her Facebook page for the media to lap up. You know, the Democrats are trying to use death panels on the poor credit card companies in a down economy. That's can't be good, right Katie?

Digby writes:

These people are sticking up for credit card companies who are gouging their customers during the holidays in the middle of a recession! What do they have to do to provoke some outrage from the Democrats, gun down Tiny Tim? (Of course, the Republicans would simply say they were defending their constitutional right to bear arms.)

Honestly, this should provoke a Democratic outcry of epic proportions because it's good policy and it's good politics. They missed the boat by failing to draw attention to the fact that the Republicans blocked the unemployment insurance extension for over a month but this issue is hitting both the employed and the unemployed, all across the country.

(Hi, dday here from Hullabaloo and Calitics and my own site D-Day. Thanks to John for having me over for the week to fill in for Dave Neiwert.)

I don't think I'm being hyperbolic by saying that the average subprime mortgage broker should probably be in prison by now. They took loans that their customers had no possibility of paying back, often by forcing them into exotic arrangements where their payments would shoot up by double after a reset. They got bonuses for putting people into a higher interest rate than what the borrowers could qualify for. Now lots of those loans have gone sour, but the broker's company has already passed on that risk in the form of mortgage-backed securities. Indeed, these same lenders who preyed upon homeowners by getting them into residences they couldn't afford are now ripping them off again by setting up loan modification companies.

Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.” [...]

FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.

Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company. The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod’s practices, and compensation for customers.

“Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif. He recounted his experience, he said, because “I really feel bad.”

Before state regulators and the Feds figured out this was going on, hundreds of loan modification companies took probably billions from distressed homeowners and provided virtually nothing in return. They saw opportunity in crisis - and they also CREATED much of the crisis by selling the homes to people who couldn't afford them in the first place.

Special place in hell reserved for them...

Of course the banks are up in arms about any legislation that would turn off the usury spigot they've milked for decades. Ann Logue at Popdose points out just one example:

...my credit card limit is $20,000. I could use the card to fly first class to Paris and go on a spree at Le Bon Marche yet pay no interest if I paid it off in full the first month it was due. But take $140 from an ATM and hold the balance for 20 days or so, and the total fees and interest work out to about $24, an annual interest rate of 208%.

Another crazy practice is late fees: I've received a credit card statement showing my payment as posted (they got my money in time to print it on my paper statement) but because they posted it one day after their "due date" they tried to charge me $29.00 in late fees. I called and complained (which works more often than you might think, do try it) and they reversed it, but how many $29.00 payments do you think got added to their balance sheets this year from people "afraid" to call a creditor?

Obama's bill does not go far enough, and doesn't start soon enough (one year for most of its provisions IF the Senate passes it) but it's a start.

The Fed lowered their lending rate to between 0 and .25% yesterday in an attempt to combat the Bush recession:

In theory, the Fed's action should reduce the cost of borrowing for consumers and businesses, since the prime rate — what banks charge their best customers — moves in tandem with the federal funds rate.

The prime rate typically influences rates for car loans, student loans, credit cards and other debt. With Tuesday's cut, the prime rate is expected to fall to 3.0 to 3.25 percent from 4 percent.

However, despite the attractive rates, banks aren't lending to most consumers and businesses. Weak financial institutions continue to hoard cash and build their balance sheets, with little appetite for risk in new loans. That's worsening the economic downturn, especially since it hurts consumers, who drive almost two-thirds of U.S. economic activity.

In a statement, the rate-setting Federal Open Market Committee said that "The outlook for economic activity has weakened further . . . the Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability."

Credit card companies, of course, will continue to charge as much as they're legally permitted, driving consumers into a ditch and accelerating mortgage foreclosures.

Isn't untrammeled capitalism fun?