Credit cards are the best means of making money that banks have ever
encountered. They absolutely will never give them up, and will readily,
if reluctantly accommodate to any and all State regulation designed to
rein them in.
Tvo,
Rest of you answer acknowledged and appreciated. I'm getting some good
stuff out of this. But this last above: Of course, credit cards are here
to say, and no mistake. My question was not of them being eliminated, but
....... if I were a moron (economic moron, let's limit ourselves to that) I
could get $60,000 of unsecured credit tomorrow, maybe a lot more. Anyone,
litterally anyone living or dead, human or not, can get a credit card
tomorrow. I am thinking the defaults and losses are well offset by the
usurous profits.
If regulations are enforces obviously credit cards would not disappear. But
would they then be about as difficult to get as a signature loan, and the
limits be greatly reduced? Would a very great number of people who can get
one today not be able to get one under better state laws (or probably better
put, under an elimination of bad federal laws)?
Not that this would be a bad thing.
But while banks, especially very large faceless banks, would be reluctant to
change the status quo; I wonder if a great body of the unwashed consumers
would not be just as reluctant since it would put them out of loop.
James
tvovozhd---my guess is that the signature loan would come back into vogue, or even more likely they would be over the Internet with an electronic signature---same information and same limitations as imposed by the three reporting agencies and credit scoring agency. If there were a few hundred or thousand small lenders who do not collude as do the Credit Card Mafia, real competition would be likely to rear its ugly head, interest rates reflecting a reasonable spread between lender borrowing cost and lender lending price. For many decades banks paid three percent on deposits and made loans at six percent---and the local bank president was still among the wealthiest in every small town, matched only by the physician and manufacturers such as my grandfather who owned seventeen creameries and as many farms, and besides the pretty lavish Wisconsin home, houses in Philadelphia and Atlantic City. His wife handled the books, she would have had a cat fit if he ever borrowed any money at over six percent interest, and after he got his start, if he borrowed anything at all.
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