Monday, February 2, 2009

Personal Debt vs Bank Debt

The Personal Debt of Americans is at an all time high and the unsecured debt, such as credit card debt is at the largest interest rate to fed funds rates margins ever. The exurbanite interest allowed by the current Bankruptcy Law does not appear to be a priority of either the Obama Administration nor of the Congress. While the Congress bandies about Billions of Dollars in Bail outs to Financial Firms the Economy sees no relief and no bottom. Currently Congress is trying to pass the Obama Administration Stimulus Proposal that even if passed will not have a meaningful impact on the state of the economy for ate least 6-9 months and most likely 2-3 years.

The Federal Government can immediately stimulate economic activity by passing legislation that limits interest rates to a set percentage over Prime Rate and make it illegal for lenders to charge set fees for late payments. A set fee for a late payment as opposed to a percentage of the payment effectively increases the interest rate that lenders receive. To limit the legal interest rate that a lender can charge is not only economically sensible for the Nation, it is morally right for the Society. Am immediate limitation of excessive interest rates will have an immediate impact on the available income that consumers have to spend which will in turn create an immediate stimulus to the economy.

While the usual bickering goes on in Congress, the State of the American Economy becomes more and more fragile with thousands upon thousands of layoffs announced daily. layoffs are occurring because Corporations see the writing on the wall that demand will not be increasing any time soon due to a lack of spendable income by consumers. While waiting for any Stimulus Package to kick start economic activity wouldn't it make sense to act on behalf of Personal Debt and strip the confiscatory elements out of the Bankruptcy Bill that was passed during the Bush Administration that allows lenders to raise interest rates based on credit scores and payment history to non associated bills.

Congress acted swiftly to lower the interest rates for bank debt, yet not a pen was lifted nor an idea presented to lower the usury rates charged to consumers on Personal Debt. Is this Federal Government an arm of the confiscatory lending practices of the financial industry, or are they representing the American People who form the foundation of the Government, lately the choice seems clear. This Federal Government only cares about the economic collapse of the Millionaires that have steered this Nation's Economy down a Dead Man's Hill.

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