Yes, this is a good thread. The orginal poster has a good point in the fact that 2/3 of the GDP is consumer spending. With 15 million people declaring bk in the last 10 years and a multiple of that number with bruised credit, you can't ignore this group's importance to the economy. I like Breeze's suggestion to shorten the lengthof time that derogs show on a credit report. Also, shorten the time to 5 years that bk's show on reports as well. Money judgements, tell creditors you got 5 years to collect or, they are invalidated. At some point, stuff has to come to an end. If banks and cc companies are concerned, let them get more detailed financial information and, force them to update the info every few years in order to cull credit risk. A lot of these problems have occured by issuing credit to people who don't have the resources to repay. It's time for credit issuing institutions to act more responsibly as well as the consumer.
I like the 5 year idea too! That is a great suggestion. The idea of the 'Amnesty' program came to mind as I was watching the news and they talked about the Government doing another 'tax rebate' type of program. Even though the 'rebate' is just an additional refund, it did tap into Government resources. Now, add to all the spending with the 1million $ a piece Tomahawk missles and such, and we are talking about a lot of money. The Amnesty program would not cost billions, it would not drain our SS funds. It would simply allow people to get back on ther feet again. As far as the 'nay sayers', I repeat. The Government has a current Tax 'Amnesty' program. BILLIONS of dollars are forgiven each year- and not paying taxes is a crime! Do you not think that. statistically, these people are not less likely to pay their taxes again? I am not suggestion let every person who is 'Fico Challenged' (let's be PC here LOL) should get a 10k Platinum Master Card to go and max out on day one. BUT, that same person should not be paying 40% on a 300 dollar limit card either! It could be a probationary type of deal. A finance class could be part of it...i.e., bad drivers take driving classes, alcoholics go to AA, etc. A participant could: - Show reason for the deliquencies, BK, etc. to a 'counselor'. - Attend a responsible spending class or finance. A good idea would be for a Bank or other Lending Institution have the class. Then that institution could issue the CC with limit/terms based on attendance, participation, grade, etc. - A probationary period could be established. If the debtor shows signs of negative spending patterns, the priviliges could be revoked. THINK ABOUT IT...... DRUG DEALERS get probation! They are criminals! DUI's still get to drive! Thats a crime! Almost all of a criminals sentence is spent on probation, they hardly ever do the full time! But we ARE doing full time. There is not probation for us. Is that fair? Shawn
As a naysayer, let me repeat that amnesty is a good idea in theory, and I agree that shortening the times derogs are on a credit report may be a step on thr right direction. But tax amnesty and reduction in criminal sentences are both linked to the government, and credit (for the most part) is corporate. It could be too much of a strain on corporate structures. I also think that caps on fees and interest would drive a lot of the sub-primers out of business, and I don't know if that would be a good thing. Believe me, I thought about amnesty often in the 116 months when I was waiting out my BK...and I'm not saying that it can't work eventually, but someday SOMEONE will come up with the right mix of parameters...
I tell ya Lionel, I believe a lot of these subprime lenders need to be out of business. I learned long ago as a young banker that, you never do anyone a favor lending them money at rates they can't possibly repay. I truely believe that some of these lenders need to be consigned to the ash heap of economic history. That being said, I think that ignoring a growing segment of society that is neckdeep in dept prolongs the recovery. Some of these lenders economic models call for bk's approaching 2 million a year if a 5.5% unemployment rate persists for a year. We probably will be at 5.2% in Nov. because the way the Labor Dept. gathers stastics, the huge airline layoffs didn't get picked up on last weeks number.
Absolutely keepmine. They're going to take a heck of a hit. But, their solution in part, will be to get new money from new cardholders. I know I wouldn't be where I am credit-wise if someone hadn't taken a chance on me. That's another mistake the sub-primers are making. Now I qualify for prime cards and rates, and if Providian would change with me, I'd give them my business out of loyalty, but they refuse to change (much) and money is money. I just give them enough business to keep the cards active.
I just called a friend of mine who is an ivy league economics professor. Unfortunately (or fortunately, lol), he gave me more ammunition against the idea of a "credit amnesty"; here were his thoughts, as best as I can relay them: Supershawn contends that the spending that would occur as a result of the amnesty would spur the economy. After all, he reasons, when people spend, they're buying merchandise that somebody else had to manufacture, ensuring that the manufacturer is hiring workers, etc. Unfortunately, the Ph.D. economist I spoke with disagrees with Shawn and said that a "credit amnesty" is not like the tax rebates he mentioned at all. Here's why: When you cash and spend George W.'s tax rebate check, you never have to pay it back. However when you spend Citibank's money, you do have to pay it back. That means that you'll have less real income to spend later because future income that would otherwise be pumped into the economy is diverted instead toward payments and interest -- which line the pockets of a select few (in this case, the stockholders of Citibank). In this respect, the credit amnesty would be a boon for the banking industry but not for other sectors in the economy at large. Making matters worse, my economist friend continued, when consumer debt is high, the economy isn't nearly as healthy. For macroeconomic reasons I couldn't quite follow (I think I reached the outer limits of my humble IQ, lol), increased consumer debt actually has a depressing effect on the consumer economy. Families who must pay back yesterday's purchases have less spendable income to pump back into the economy for years to follow. One thing the professor said is worth quoting here verbatim: "The only way a so-called credit amnesty would stimulate the economy is if the stream of credit is endless and never needs paying back." That's quite a bit of food for thought. Comments? Doc
Well, first of all, it is an idea. I stated in an earlier post that I really didn't feel like 'debating' it with you, let alone an 'Ivy League' Economist. My degree(s) are in Engineering, not balancing check-books. It is simply an 'idea' I decided to share with the board, I am not going to stand in front of Congress with it. But, alas..... The purpose of the idea is not to strictly 'stimulate the economy', that would be but one of the benefits. And I believe it would. And, again, I am not saying give someone a credit card and let them charge it up. I don't know why you keep harping on that- you are quoting me way out of context there. There are millions of people in this Country with poor/marginal credit. These people, or 'deadbeats' as you call them [us], are unable (without extra expense or great difficulty) purchase a home, purchase an automobile, obtain loans for education, etc.... Now, some can't because they didn't pay their bills. BUT, some cannot because of true hardships. NOW, should these people really have to suffer for 7-10 years for something that may have been a true mistake? Maybe even someone elses mistake? How many people here have had their credit ruined because they lost their job? Or their spouse (or ex spouse) ruined their credit without their knowledge? Or like me, had a medical condition that was both un-expected and un-manageable (a misdiagnosis in my case)? Are you still going to say it's all our fault because we 'didn't plan' or have savings? Some things go a little past that. And are you still going to say that we should have to suffer for a full 7-10 years? I think the 'criminal' analogy is a good one. There are people commiting crimes every day, and yet they usually serve less than 5% of their sentence. BUT, get a charge-off, and it's going to be there for at least 7 years (unless you call Bill Bauer- LOL). I think the credit penalty is just way to severe in most cases. And that is another big reason for my idea. Now, how would this stimulate the economy. Think again of all the things 'bad credit' affects - a checking/savings account - an automobile loan - home ownership, and sometimes even rental - educational loans - yes, credit cards - insurance rates - basically ANY line of credit! Now, this won't stimulate the economy? Geez, let me count the ways..... - Get an educational loan->Get a better degree->Get a better job->Make more money (or hell, be able to get a loan to send your kids to College) - Get an automobile loan->More jobs at the dealership(sales, mechanics)->More jobs at the assembly line->More jobs at the parts factory->more jobs for truck drivers that deliver the parts, etc - Be able to get a home loan->Buy things for the home->Mortage payment is actually an Investment in your future, a tax write-off, etc - Get a credit card with a 'normal' rate -> Have payments that are not overinflated with interest -> Pay the card off sooner -> More money goes to principle/products, not interest And that is just a small list. It could go on forever. Now, ask the good Ivy League Doctor how allowing someone to buy a home is a bad thing. Please explain the benefits of forcing people to rent. Explain how renting creates an endless supply of jobs. Or, explain how another $300 tax credit will help someone get a house. At 20% down, that would be a $1500.00 house. You said " However when you spend Citibank's money, you do have to pay it back. That means that you'll have less real income to spend later because future income that would otherwise be pumped into the economy is diverted instead toward payments and interest -- which line the pockets of a select few (in this case, the stockholders of Citibank). In this respect, the credit amnesty would be a boon for the banking industry but not for other sectors in the economy at large" While I understand the partial logic in that, I disagree with most of it. First of all, you are harping on credit cards here, still, which is NOT the extent of the plan. Giving someone, in this instance, a high limit card and saying 'you are forgiven' would probably not be a good idea. But, lets take the CC example. If you were able to finally, because of the amnesty program, get a credit card, you will be able to make purchases you could not make before. Now, whether they be Travel, Retail, Investment, whatever, they are going to stimulate growth in the economy. Each one of these purchases will benefit that industry and, most likely, even trickle to other parts. Now, you are going to be making payments. So yes, the bank will ALSO be getting money. HOWEVER, because of the amnesty program, your interest rate is 9.9%, not 40%. You will be making payments that actually reduce your balance. You will be paying your cards off sooner, and making purchases more often. So, no, you are NOT just benefiting the banking industry. You are benefiting the bank, Pier 1, Target, Citgo, etc. You are benefiting the malls that house the stores. You are benefiting the people who work there. You are benefiting the families of the people who work there. Etc. BUT, AGAIN, it is NOT just about getting a credit card and racking it up. It's about fairness. It's about equality. And if we can get these things, and at the same time boost the economy, well thats just great. Theoretically, a person in today's society with a 10k dollar debt could either- a. Rob a convience store, pay off the debt. Get caught (crime doesnt pay, ya know) and do 6 months in jail and 2 years probation. He'll have good credit. "People make mistakes", everyone will forget about it in a year. b. Declare BK7 and not be able to get a loan for 10 years- well, probably 11 counting the year he'll have to fight with the cra's to get his credit reports fixed after the 10 year period is up. That BK will haunt him for the rest of his life. Hmmm...who was really in the wrong, but who paid the real price? Now, that's totally blown out of proportion, but it does make you think. Shawn p.s. infinity, no take backs, double-stamped with a twist.
You're on the right track SuperShawn. An idea can't become a GREAT idea without looking at both the positive and the negative. Let's take the example of a car loan. Amnesty is granted, and any of my credit negatives only go back three years (just for the sake of argument) and my positives go back a max of seven. Why would I, as the CEO of CreditTalk Auto Financing, not just readjust my credit standards to reduce the additional risk I would now be taking on? So before where I had a minimum requirement of a 660 fico for a 9% auto loan, I know ask for 775? I'm all for stimulating the economy, and I realize that wasn't even your main point. I just can't get around how 1) lenders would accept the additional risk when they can change scoring models at will; and 2) lenders do not fall under governmental controls, so I see the 'criminal/parole' connection, but don't think its applicable. Unfortunately, I don't think there's a way to find out what percentage of people who filed BKs or had charge-offs, etc, HONESTLY filed because they were dealt a bad hand, what percentage just didn't manage their money effectively, or a combination of both. For the first one, sure, creditors should try to work out whatever they can with the customer, because it benefits them both in the long run. But for the latter two (which is where I come in), the lender is still a business, and a business' mission is to turn a profit for the owners/stockholders. As I see it, without doing any research, corporations could not realistically afford the downside of credit amnesty. And we could do a much better job educating people about personal finance starting around junior high. Then again, it is late, and I'm outta here for now.
Bright Minds!!! I love the ideas being exchanged on this thread. Good points by both sides. Don't give up Supershawn, PschoDoc is just spurring debate in order to educate. I don't think he would even try it if he didn't feel something productive would come of it (which in a sense is a compliment to you). This is an idea that is worthy of debate. It is something that everyone could benefit from in reality. Your idea will keep everyone open to more ideas, which may bring about solutions to our present economic status. One point that I would like to make is that the MEDIA is very much to blame for much of our economic woes. Never in my life have I heard so much about our economy. You would think that it was the 1920's all over again. This negative ranting has put consumers on an all time high alert. This doesn't spark an economy when all that we see is the possibility of really hard economic times through the glasses of headline and rating mongrels. This is the worst I have ever seen them attack the public with their fear tactics..
GoDaddyo put it far better than I did. Let me try again too: Shawn! As Godaddyo said, I hope you don't take the debate personally at all. In fact, it's a testament to the power of your creativity that we're debating at all. There are a lot of truly dumb ideas thrown around in this world (including a few put forth by me here from time to time, lol), and I tend to ignore those. Your idea, on the other hand, was clever enough and novel enough to warrant some deeper discussion. Don't forget that the best ideas must withstand serious debate before they can be implemented -- usually before a congressional subcommittee (where more than just a small handful of consumer advocates and Ph.D.s can have a go at it, LOL). I've really enjoyed your effective defense of some really creative thinking on your part. Frankly, we've touched on some of the most pivotal and controversial dilemmas surrounding credit, from economic implications to consumer psychology, from personal responsibility to collective trust, and from the rights of citizens to have credit versus the right of other citizens to extend it or not. Now, all of that said, I'm sticking to the other side of the debate. Doc
Well, I have not been on this board forever, but I don not think anyone has EVER said "I have been sitting on my butt for years and now I owe 10k. Please help me." From what I have gathered from this board, most of us are here because they had situations arise that were out of their control. I don't think I've ever seen a post that someone didn't pay their bills because they just didn't 'want' to work. I find that post rather insulting. Shawn
Doc- I am not taking your posts personally. I actually responded to the last at about 2 or 3 in the morning...late night last night...so don't take anything I said the wrong way. Plus, I know the truth...you thought it was a GREAT idea so you ran to the Ivy League PHD to try and get it going before I could....you aren't fooling anyone. LOL! BUT- I still see you guys harping on the credit card part. You have yet to comment on the complete aspects of the program, i.e Financial counseling, home loans, educational loans, etc. I am NOT saying give someone a credit card with a high limit. I am saying ease some of the restrictions, cut some slack, let people live their lives. Bad credit is more than not getting a 'credit card'. Checking accounts, savings accounts, cell phones, housing, health insurance, car insurance, transportation. These things are not exactly 'privileges', they are needed for everyday life. While the criminal analogy may not be exactly comparing apples to apples, I think it makes a good point. Criminals are 'reformed', whether it be by time served, counseling, probation, etc. And they NEVER serve their full term. And, by the way, they are CRIMINALS. They committed a crime. I don't think anyone every accidently robbed a bank, you pretty much have to plan that sort of thing out. However, many of us have bad credit by, well, 'accident'. We might have planned, but it might not have worked out. It may have been medical. It may have been divorce. It may NOT have been our fault. But, where is our 'probation'? Where is our 'counseling'? WHERE IS OUR TIME OFF FOR GOOD BEHAVIOR? It doesn't exist, we are simply the CRA's 'b!tch' for 10 years. Take a look the whole thing- don't just focus on the CC issue. Shawn
What we are discussing here is neither a criminal nor a civil case.both of which impose far more lenient sentenses (and then only after being tried and convicted) than credit issues do. With credit issues much harsher sentencing is met out without benefit of of trial or rasing a defense!
Consumers aren't guilty No Trial was held The idea of consumer punishment has no place in the market place
=== How do you get a job and pay off credit you can't get ???????==== ????????????????????????????????? ??????????????????????????????????????????????????????????????????????????????????????
