Coda
By today’s standards, my grandmother had some pretty strange ideas about money.
For one thing, as a survivor of the stock market crash and bank failures of the Great Depression, she refused to keep her money in a bank during a Republican presidential administration. She blamed the Republicans for everything bad that ever happened to the country’s economy.
A die-hard hater of Calvin Coolidge and Herbert Hoover, she cut Dwight D. Eisenhower a little slack because he led the American forces in World War II, and wasn’t, to her mind, a real Republican.
But on the day Richard Nixon took over at the White House in 1969, she pulled all her money out of the bank, put it in coffee cans and hid those cans all over her house – even buried a few in the back yard – on the theory that even a coffee can full of money hidden in the piano was safer from thieves than leaving it in the hands of Republicans.
For another thing, she never bought on credit. If she needed a house, she paid cash. New car? Cash on the barrel-head. Time for vacation? Dig up one of those cans of money.
And that pay-as-you-go philosophy is why, when she applied for her first credit card (Jimmy Carter was in the White House. She must have been feeling pretty spry.), the credit card company turned her down flat . The guy at the credit card place explained they just couldn’t offer credit to a 75-year-old woman who’d never had any credit before and had no history of paying money back.
She just shrugged her shoulders and got on with life. When she died, we found cans of money hidden all over her house. Ronald Reagan was president.
These days, I think about grandma every time the mail comes.
Like many Americans, I carry too much credit card debt, but credit card companies are desperately trying to give me more. One month, just for laughs, we kept track of all the credit card offers that came to our house. We’d gotten 36 by the time we stopped counting, and every one of them seemed to offer a larger line of credit. No offer suggested a credit line smaller than $5,000 and some went as high as $50,000. Lots of them even came with checks you could start cashing right away.
In rough total, the amount of credit offered our family (counting the $150,000 line of credit from our mortgage company) in a single month was in the neighborhood of $870,000. That’s more money than I could pay back in what’s left of my lifetime, and maybe my kids’ lifetimes, considering the interest rates on some of those cards.
I’ve talked to several other people in the last few days, and they get a similar number of credit card offers. So it’s easy to see the temptation, to see how simple it is for families facing temporary, or even longer-term financial difficulties to get in real trouble. Automobile repairs, medical expenses, education expenses and the like add up fast, and before you know it, you’ve got $50,000 in credit card debt and you haven’t even bought anything frivolous.
Everyone seems to agree that soul-stealing narcotics like crack cocaine and methamphetamine present clear and present dangers to the fabric of our society. And we all agree that the criminals who supply and distribute those drugs need to be prosecuted.
But how does our government respond to a credit industry that supplies the financial version of crack and threatens the fabric of millions of hard-working families? Not by putting them in jail. We respond by revising the nation’s bankruptcy laws to make it much harder for people in way over their heads to make a fresh start and retain enough of their assets to rebuild their lives.
In the next few days, the U.S. House of Representatives is expected to pass a law making it much more difficult for desperate families to start over by declaring bankruptcy.
Largely crafted at the behest of lobbyists paid by credit card companies that now send out over 5 billion credit card offers in this country each year, the bill is a ham-fisted measure that makes no distinction between people who are bankrupt because of circumstances beyond their control and people who spent $100,000 on fine wine and trips to Aruba.
Under the law, debtors making more than the median state income would have to keep paying their devastating debt for years after filing bankruptcy. Even those bankrupted by medical bills or the burdens of active-duty military service would not be exempted. And among its other very questionable provisions, the bill requires those who want to file bankruptcy to seek the advice of a credit counseling service before they’re allowed to file.
There are 1.6 million Americans currently involved in the bankruptcy process, and 1 million involved in credit counseling. But credit counseling is an industry rife with scam artists and fraud, and even experts who have studied it for over years can’t say for certain which companies are legitimate. There are hundreds of ongoing investigations regarding these counseling companies, some of which claim nonprofit status.
In other words, the new law not only encourages another opportunity for debt-ridden families to be victimized by financial vampires, it requires it.
We do not craft laws to penalize the victims of the drug trade, and we should not be making laws to protect the victimizers and punish the victims of the usury trade either.
If we want real reform, we should be making laws that require credit card companies to offer credit only to those who can really afford to carry it, and offer that debt in much smaller amounts. We should seriously regulate the interest rates allowed on that debt.
We should be making laws and creating programs that keep Americans from drowning in debt and help those lost in the wilderness find their way out.
Renewing our commitment to personal responsibility and living within our means wouldn’t hurt either. Nor would cutting up a few credit cards.
At least that’s what grandma would say.
Gregory Bean is executive editor of Greater Media Newspapers.