Credit Card Companies Fight Reform

By Danny Schechter, AlterNet. Posted May 11, 2009.

Public debt is at its highest since the l950s. Deficits are growing along with federal borrowing even as tax revenues collapse. These trends show that a squeeze on consumers will continue and could get worse.

What’s even worse is that the whole government strategy, with its emphasis on trying to get lending going again, seems bent on returning us to the status quo ante, a failed system designed around promoting more and more consumption.

"That's the root of the credit crisis today and the economic crisis," argues Professor Ben Barber, author of Consumed. "The United States today has a gross national product 72 percent of which is consumption. Seventy-two  percent. … So the question is, how can America have a sustainable capitalism when it depends on selling people stuff they don't need, they don't want and they can't afford …"

Barber fears that the Obama economic plan -- like the Bush post-9/11 "time to go shopping again" faith-based "plan" -- is, "Let's get people getting those credit cards again. Let's get people to the mall. Let's get people spending again. … Unfortunately, the new economic team of the new president may be saying somewhat the same thing. Let's meet this world crisis by getting Americans back to the mall, getting them back to their credit cards, getting them to be able to buy the houses again they still can't afford."

Economist Max Wolff adds: "And a bigger question to me is, will we see a structural change or will we go through a long bad recession while we waste our money struggling to rebuild an unsustainable system that should have never been erected in the first place?"

So, dear American Express, thank you for your concern about my economic well being, for protecting me from my own financial situation and for rewarding my loyalty by abandoning your own.

Oh, yes, good luck in keeping the company going even as your own bonds are now considered junk. Last year, you cut 10 percent of your workforce with profits off; more recently, thanks to monies from our government and more people living off their cards, you are doing better.

Your last quarter brought in a net income of $437 million with revenue at $5.93 billion, an 18 percent drop from $7.24 billion in the quarter a year ago. Your net charge-offs, a measure of bad loan write-offs, rose to 8.5 percent from 7 percent in the previous quarter.

Maybe it was all my card. Perhaps I was the problem. I will soon be gone.

Also, thank you for once again funding the Tribeca Film Festival, which may have been one reason the festival turned down my film, In Debt We Trust.

No fear, even as I charge it, I know, contrary to your marketing slogan, my card is not my life.

See more stories tagged with: economy, credit cards, financial crisis, visa, master card, american express

Danny Schechter writes the News Dissector blog for Media Channel. His latest book is Plunder: Investigating Our Economic Calamity (Cosimo Books).

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