Monday, November 24, 2008

Citibank thanks America for filling its begging bowl with a royal one finger salute. And Congress snores when it should regulate interest rates.

Talk about biting the hand that feeds you!

Last week, while Congress was engineering a bailout package of the taxpayers’ money to rescue Citibank and save the economy, Citibank was sending out notices to its cardholders of a new and usurious policy — a policy that could drown consumers and help sink the economy.

Louie the leg-breaker
is now a Citibanker

Usury is nothing new to bankers who issue credit cards. For example?

While banks, on average, were paying their customers 1.25% on interest checking and 2.40% on money market accounts, they were charging credit card holders an average of 11.27% overall to borrow the same money. That's according to this morning’s And that’s just the average.

Those are the kinds of rates that used to get loan sharks from the Bonano family put away for 10 to 20 years in Sing Sing. But it’s worse than that.

According to a “Notice of Change in Terms and Right to Opt Out,” set in hard-to-read, tightly spaced mouse type that Citibank mailed out last week:

All of your APRs may increase if you default under the Card Agreeement that you have with us because you fail to make a payment to us when due (even though we may have waived the late fee), you exceed your credit line, or you make a payment to us that is not honored.
Increase to how much, pray tell? Why, to a rate that would make a mafia collector like Louie The Leg Breaker blush.
In these circumstances, we may automatically increase your APRs (including any promotional APRs) on all balances to the Default APR, which equals the Prime Rate plus up to 23.99% or up to 29.00%, whichever is greater.
The math of Citibank

Twenty-nine percent? Twenty-nine percent!! Do the math (which you can do with the interest rate calculators at At that rate, if you were $5,000 in the hole and gave the vig collectors at Citibank or any credit card company $128 a month to pay down the loan, it would take you ten years and cost you over $15,000 clear your debt.

Remember, this isn't a trap Citibank has set for the rich. This is entrapment of the poor and desperate.

Round up the usual victims
of banking greed

Who’s likely to run into a default problem and get socked with Citibank Mafia rates? Why, people in financial trouble. People who lost their jobs thanks to the meltdown caused by the banking industry's own irresponsible practices. People who are sick and have no medical insurance. Or people who went a few bucks over their credit limit, by accident or due to unavoidable emergency.

Nevermind knowledgeable financial commentators pointing out that Citibank’s terms (the bank will have to pay between 5% and 8% for its “screwup money” compared to the 29% Citibank wants you to pay for screwing up) are “too lenient.”

Citibank flips the bird
to American taxpayers

Even the timing of Citibank’s announcement — that it will charge extra vig to the weak and desperate — matches the Big Three auto makers’ stupid insensitivity. (Just last week, the Detroit CEO’s extended their own begging bowls for the taxpayers' money to Congress — after flying to Washington, each one on his his own private jet.)

Citigroup's CEO deserves to get hauled before the banking committees of both houses of Congress, have his pants yanked down and get paddled stiffly across his hind end. He deserves it for the matching insensitivity of demanding cheap money for his own bank’s screwups while charging Mafia usury rates to his wounded customers.

Incidentally, strapping consumers reduces their ability to help shop this nation out of the current depression we're in. And make no mistake. It's not a recession. It's a depression.

Federal regulation
of credit card rates is

what we really need

All the bank rate gouging is possible because Congress allows credit card interest rates to be set by individual states.

This may have made sense several decades ago when all banking was local. If the bank of East Muleshoe charged the kind of rates Citibank is charging, East Muleshoe farmers would converge on the state house with raised pitchforks, and local bank credit card rates would quickly settle back to reality.

But under years of Republican deregulation, banks doing credit card business can go shopping for a friendly state that will let them charge big city Mafia rates. In exchange states get some local employment and a generous annual gift to the state treasury. Two states, South Dakota and Maryland are now profiting off the misery in the other 48.

This has got to stop. Credit card business is interstate commerce. Interest rates need to be regulated by Congress, and kept at manageable levels. Either that, or states should have the right to regulate the rates charged to any of their inhabitants.

Otherwise, the bailout is just another gift from your wallet to the banks, and grants them permission to continue ripping you off.

Tell Congress to
stop the ripoffs.

Here’s how:

You can find the mailing and e-mail addresses of your senators and Congressional representative here. Write to them. Today. Demand Congressional regulation of credit card interest rates.

You can learn who represents you and how to contact them by going here.

Write a letter. Or simply copy and paste into an e-mail this post from The New York Crank under the heading, “I agree with this.”

Let Congress know you want something done about the greedy bastards. And that something is either Federal credit card rate regulation, or allowing states to regulate all rates charged to their residents.


scottie said...

thanks for the information.


Pat R said...

my initial thought upon hearing about Citibank's potential bankrupcy was, Yipee! this will cancel out the small fortune's worth of debt I have stored up on my trusty Citi-card... right?

The New York Crank said...

Uh, you're kidding me Patrick, right?

If Citibank were to vanish tomorrow (hardly likely with the government ready to bail it out of any soup it gets into) its assets would get sold off. Those assets include your credit card debt.

And then somebody else would be running after you to pay up.

Think of it as Louie The Leg Breaker simply moving on after his capo gets offed and joining another crime family.

Crankily yours,
The New York Crank

Shineola said...

You call that usary? What about the Payday and Car Title loan outfits that charge 100 to 400 percent interest in many States and prey on the poor and desperate? Looks like the Mafia has gone mainstream.

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