Tuesday, May 19, 2009


Maybe I'm wrong, but it seems to me that papers like The New York Times used to make a lot more money when industry groups actually had to pay for ad space to publish propaganda telling consumers that a pending piece of progressive legislation was a really, really bad idea -- not for the fat cats behind the propaganda, heaven forfend, but for Joe and Jane America, whose interests are, of course, foremost in the fat cats' minds.

Now I see the Times just puts that kind of propaganda on the front page as a news story, for free:

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

"It will be a different business," said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. "Those that manage their credit well will in some degree subsidize those that have credit problems."

As they thin their ranks of risky cardholders to deal with an economic downturn, major banks including American Express, Citigroup, Bank of America and a long list of others have already begun to raise interest rates, and some have set their sights on consumers who pay their bills on time....

Are these guys really going to start jacking up charges for well-off customers? Maybe somewhat -- but how far can they go with that without running the risk that consumers will spend less, or flock to cards that don't drastically curb benefits or raise fees, or rediscover the virtues of, y'know, cash? (We're talking, after all, about people who have ready cash.)

The point of this is to derail the credit card bill before it passes, in a variant on the usual Astroturf strategy. Usually fat cats find a few struggling people and put them forth as the real likely victims of legislation they don't like. In this case, it's obvious that curbing the excesses of the Kafkaesque, usurious present-day fee/penalty/interest rate structure is going to help the less well off -- so the potential victims are said to be upmarket ordinary folks. The fat cats want those folks up in arms about this, in order to head this bill off or get it watered down.

Will it work? I don't know, though I see that the propaganda is catching on just where you'd expect it to:

If all else fails, blame it on the black socialist in the White House.

Hey, credit card issuers -- wanna save some money? Why not stop sending my household hundreds of applications a year? We have all the plastic we need, and we used to think that after the first thousand or so applications we didn't fill out and return, you guys might kinda get the message and give up on us -- but you haven't. I know there's exquisitely sensitive software out there that can predict future consumer behavior from past behavior, so why the hell can't you people figure out that we don't want any more of your damn cards from our blatant disregard of your previous offers?

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