My first job was in banking. I was told the reason that the state legislatures allowed us to charge high (at that time usurious) interest rates for credit cards was because we were taking a higher risk than other lenders. But as business people, we verified that borrowers could repay the debt and that they had a good credit history before we would issue credit. This was the way that we reduced our risk as lenders.
With passage of the bankruptcy reform bill by the Senate, the credit-card industry is assured of legally absolving itself of this fundamental principal of lending.
For some years, credit cards have poured through the mail to anyone and everyone. Credit limits have been increased beyond reason. The reform act removes much risk from the lenders while still protecting their high interest rates.
I am now 52 years old. I have never had to file for any bankruptcy, and I pray that I never will. But I am extremely disappointed that big business appears to have bought this legislation. This whole thing leaves an extremely unpleasant taste.
