Do Onto Others…

Forbes.com writer, Michael Maiello wrote an article called "Credit Card Hypocrites"  which describes Jamie Dimon, the Chief Executive of JPMorgan Chase’s experience with the Troubled Asset Relief Program (TARP). Dimon calls the bank’s experience with TARP as traumatic, because of how the "rules changed" after the government gave the bank’s bailout money. Banks received the money and thought they could use it how they wanted, or however they saw necessary. But, in a move that Dimon complains about, the government went and changed the rules – by placing limits on how much money bank executives could receive, and by creating shareholder rights requirements, and even restricting the hiring of foreign employees.

In my favorite lines of Maello’s article, "The government changed the rules, and Dimon is traumatized. Now he knows how anyone with a Chase credit card feels. Or most any credit card, for that matter."

Think about all the credit card users who received their credit cards with a certain dollar amount credit limit, and a certain interest rate. Think of how many of these cardholders started using their cards under those terms, only to find out three months later the interest rate was increasing, their credit limit was being lowered, and their due date was being changed. Credit card lenders have had the right to change credit card agreements whenever they wanted, and for any reason they wanted. Cardholder due dates could be adjusted without notice, causing the cardholder to make a late payment and then have to pay a late fee on top of it. The late payment triggered interest rate increases and additional penalties. Money already spent could be charged higher rates -and credit limits could be lowered BELOW the amount the borrower had already spent on the card – triggering over-the-limit fees!

Do American consumers have much sympathy for credit card executives like Jamie Dimon who are traumatized by the upcoming changes that will put a stop to these practices?

Doubtful.

Major lenders, including JPMorgan Chase, Bank of America and Citigroup oppose several pieces of the new credit card legislation. They don’t feel they should have to mail bills out 21 days before the payments are due, and if the bank is slow to process a payment they don’t feel they shouldn’t charge a late fee. A late payment is a late payment, regardless of "what" caused it to be late, right?! These banks are arguing that if they are to continue lending money to consumers they’ll need to do whatever they want to the borrowers, for any reason- as they have been doing for years.

Some of the banks are threatening to stop lending all together when the reforms take place. Will that really happen?