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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > May > 06
Wednesday, May 6, 2009
Editorial: Lenders beware; end to gouging is here
Sometimes people say that it doesn’t matter who’s president, that politicians are all the same.
On issues from torture to bailouts, there’s no question that Republicans are not calling the shots any more. Whether you think President Barack Obama and the Democrats are overreaching, or whether you believe that they’re making a course correction, there’s no disputing that it’s a different day.
Take the “Credit Cardholders’ Bill of Rights” that’s moving quickly through Congress. The president, who recently told bankers that he hasn’t forgotten what it was like to have credit card debt, is setting new expectations for lenders.
In a phrase, it’s, Cut out the gouging.
Democrats are proposing a bundle of ideas that would make it harder for banks to ding customers. Too many of the rules are stacked in their favor and work to the disadvantage of even good customers.
Among the changes being sought:
— Preventing card issuers from hiking interest rates “any time, for any reason” on existing balances. Instead, increases couldn’t be imposed unless a borrower is more than a month late, a promotional rate expired, the rate is a variable rate or the cardholder doesn’t follow through on an agreed-to payment plan.
— Allowing consumers to set their own fixed credit limit, so they don’t get in over their head.
— Preventing the practice of double-charging for interest on debt consumers have already paid on time.
— Outlawing lenders from charging a fee for payments made over the phone or online.
— Requiring that payments over the minimum be allocated to the balance with the higher interest rate rather than the lowest.
— Prohibiting credit card companies from using a consumer’s card history with one credit card company to justify a hike in interest on a different card.
— Restricting marketing to college students and others under age 21.
Reining in the credit card industry was the logical follow up to putting limits on subprime lenders, who peddle loans to people with bad credit histories, the poor and unsophisticated borrowers.
Predatory loans have trapped millions in debt, but those loans are not nearly as ubiquitous as credit cards with ridiculously costly or punitive provisions, often buried in the fine print.
The credit card industry — not unlike payday lenders who make two-week loans at exorbitant rates (until Ohio put a leash on them) — has sucked people into borrowing amounts that are impossible to pay back once interest, fees and penalties start mounting.
Credit cards are a fact of life, and an extremely handy one, when they’re used responsibly. Of course, consumers are obligated to control their worst instincts, but lenders also need to be checked so they don’t take advantage of undisciplined people.
As a society, we have all sorts of rules that protect people from their own bad habits; and these rules aren’t just about protecting consumers from themselves.
Credit card companies, for instance, sell their loans on a secondary market, just as lenders sell their mortgages. Now everyone knows the cost to the economies of the world of allowing lenders to make loans to people who had no business taking on so much debt.
Last year the Federal Reserve Board put new restrictions on credit card companies, but those rules won’t take effect quickly.
Moreover, with the restrictions in law, critics would have to go to more trouble to undo them. In effect, the Fed, too, was reading the handwriting on the wall that there was a new president coming into office and that experience was proving that banks couldn’t be trusted to always do the right thing.
Nobody is overreacting in insisting that credit card issuers are out of control.
Permalink | Comments (8) | Post your comment | Categories: Economy, Editorials, Ellen Belcher, National Politics, Predatory lending
Editorial: Somebody has to own city’s empty houses
When the news surfaced this week that Dayton has one of the 10 emptiest neighborhoods in the country, the most common local reaction might have been “Only one?”
Wait. Montgomery County Recorder Willis Blackshear, who monitors this stuff closely, says the foreclosure epidemic is far from over; it has a few years to run because some people who’ve lost their jobs haven’t yet lost their houses.
An analysis of federal government data by The Associated Press found that the three neighborhoods with the highest portion of empty buildings in the country are in Columbus and Cincinnati.
A Dayton neighborhood ranks ninth, with 40.5 percent of 1,739 houses vacant. The neighborhood is between Salem Avenue and Main Street. It was the subject of an investigation by this newspaper last year. The paper found that Fountain Avenue had more homes sold at sheriff’s auction in the previous three years than any other residential street in the county.
The AP analysis is a little bit surprising, in that Columbus and Cincinnati have been mentioned less often as victims of the foreclosure crisis than Cleveland, which doesn’t show up in AP’s top 10. The study demonstrates forcefully that the problem is widespread in Ohio.
That’s important because: Late last year, the Ohio Legislature granted Cuyahoga County (Cleveland), but no other county, the right to set up a program to deal with home vacancies.
Cuyahoga wanted a “land bank,” a public agency to take control of empty houses and land and to make plans for reusing them. Why not, when the marketplace is failing completely to deal with the multiple problems that result from widespread vacancies: houses and yards become ugly, bringing down property values; they attract vagrants, thieves and drug dealers, making neighborhoods dangerous. They foster still more vacancies.
When the Legislature decided to let Cuyahoga County get systematic about approaching this problem — and to use money from penalties and interest on property taxes to fund the effort — there were qualms.
Government was getting into an activity normally concentrated in the private sector. It was getting into a complicated business that requires special expertise and energy. Lawmakers said they weren’t getting any sense of urgency and readiness from other urban areas about land banks.
So legislators decided to think of the Cleveland project as an experiment. Though not enough time has passed to evaluate the experiment, certain other things have changed. The Democrats took over the House of Representatives. And the foreclosure problem hasn’t abated and arguably has worsened.
So now the House has decided to allow smaller counties to set up land banks, too. The measure is in the budget bill that was just sent to the Senate.
Some people at Dayton City Hall and elsewhere in local government circles are hoping the state will give this community the same opportunity that Cleveland has.
City Commissioner Nan Whaley was leading the effort on behalf of Dayton even last year. She and others need to get busy quickly in convincing the Senate that land banks are a high priority for Montgomery County and that the locals are ready to run one.
This is not a spending measure. It is not a government intrusion in any realm the private sector is energetic in. It’s just about allowing a community to fight for itself. The Senate should be for that.
Permalink | Comments (8) | Post your comment | Categories: City of Dayton, Economy, Editorials, Martin Gottlieb, Montgomery County
