Bad Credit

Card Declined GraphicAt one time, charging exorbitant interest on loans was called loan-sharking and was illegal in this country. Now, it’s standard business practice among the credit card companies. When I got my first credit card in the early-80s, it was possible for consumers to write off credit card interest on their taxes. One of the enduring legacies of the Reagan administration was that this was abolished during his term of office. It was once the banks who determined one’s credit-worthiness for mortgages and car loans, now all those functions have been ceded to the credit agencies. We’re none the better for it.

We hear a lot about identity theft and credit agencies spend billions every year combating it and yet, it’s the credit industry that’s solely responsible for identity theft, because they’re the ones who’ve been compiling all the info on people that ends up in the hands of criminals. The very information stolen and used to create bogus accounts is the information compiled by credit agencies. A person’s Social Security number was never supposed to be used for identification. Banks and creditors are the ones who started using it as such and it’s often through compromised credit records that this information falls into the hands of the wrong people. The credit reporting agencies that keep track of all our information were created by financial institutions and answer exclusively to them. Even the credit monitoring agencies, which alert consumers when suspicious activity is detected are products of the financial industry in its attempts to deal with a problem it has caused.

In 2007, the financial industry was responsible for the worst economic meltdown in history by playing fast and loose with the funds entrusted to them by investors and consumers. Most of what they were doing was, at one time, outlawed or heavily regulated by the government, but these rules were watered down by corporate friendly politicians throughout the 90s and 00s, as was much of the antitrust legislation passed in the wake of the Great Depression. This allowed banks and other financial institutions to become “too big to fail” as was the argument for the government bailing them out. Many parts of the world are still reeling from the effects. Yet, it is highly unlikely that anyone responsible will be held accountable, especially since a lot of them serve as economic advisers to Congress and the President.

Aside from our horribly broken political system, the financial industry is probably the one sector of our country most in need of regulation and reform. Unfortunately, our elected officials have demonstrated time and again that the people who pad their pockets get first priority and the consumers at the bottom are more or less on their own in dealing with the problem. The financial industry has repeatedly demonstrated that it must be regulated or else it goes to any length to take advantage of the public. Pay day lenders, toxic credit swaps, and sub-prime mortgages are just a few of the avenues that have been employed by the financial industry to dupe consumers and rack up high profits. The fact that the lending agencies can foreclose on someone’s home, then sell the property at a profit shows that all the power is in their hands.

In the days of mill towns, workers were forced to deal with the “company store” which sank them so far into debt that their only choice was to work long hours for demeaning wages just to maintain payments. Under this system, there was no hope of ever getting ahead, and workers sometime spent their entire lives working for the company with nothing to show for their efforts. Unionization helped workers overcome these horrible conditions, but over time many unions became corrupt or were targeted by union busting politicians working on behalf of corporations seeking to lower their bottom line. Along the way, the middle class lifestyle that was the bedrock of the “American dream” has slowly been eroded away, with workers now spending more hours at work for much lower wages and high interest rates. Again, politicians have colluded with the same greedy business interests they’re supposed to protect the public from to bring about the situation we find ourselves in now.

Ultimately, it’s in the hands of consumers to correct this state of affairs, but that means becoming better informed and taking more of an interest in politics at both the local and national levels. It means investing time in knowing where our elected officials stand on certain issues and who’s financing their campaigns. Most important, it means holding our “leaders” accountable for their decisions and actions. It’s not enough to continually rubber stamp candidates who promise to lower our taxes while being vague on their full agendas. As with everything in life, it requires work and diligence to bring about change, but the rewards are certainly worth it.

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