Discussion:Another Shoe, & the Twilight Zone
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Discussion Forum Index --> General Chat --> Another Shoe, & the Twilight Zone
| 31 October 2008 | |
| Well, another shoe (note, not the other shoe) has dropped. Credit cards. http://www.msnbc.msn.com/id/27462445/
Now, I had to read this article twice, and it's still confusing. The banks want to voluntarily cut principle by 40% on defaulting cards. Why do they need government permission to do this? Perhaps it affects their capital requirements because a loan to a customer is an asset to a bank. Ok, that's the first thing they want. But, I don't trust banks bearing gifts; what they really want to prevent is the repeal of the pro-creditor 2005 revision to the bankruptcy law that they see coming as consumers fall into mass default. One down. Then instead of lobbying to help consumers by cancelling COD income entirely, they propose that they be paid back the remaining 60% of principle on the card, and that the govt. would "subordinate" itself to them on the tax by granting a tax deferral to the consumer on COD income until such time as the consumer had paid the bank the 60%. Cheeky? Arrogant? This is a stunning new world we are in. It also indicates to me that the stuff we know about credit card defaults is just the tip of the iceberg. | |
| October 31, 2008 | |
| I also found it interesting that they were going to allow the income reporting to occur at the end of the repayment period. Of course, for accounting purposes, the 40% should be written off right away. I wonder how many years the creditors get to pay off the balance. | |
| 31 October 2008 | |
| The whole thing seems strange to me. When a bank voluntarily comes forward with something like this, something is up, and I think that they fear a repeal of the revised bankrupcty law if masses of consumers go BK.
I thought it was really cheeky to ask the government to wait for it's money, as if the financial industry has not received enough of our TP money, but yet the government should wait. Standing back further, if they really wanted to help the consumer, why not lobby that the COD income just be forgiven? | |
RoyDaleOne (talk|edits) said: | 31 October 2008 |
| COD by the bank would be, naturally conditioned on the full payment of the 60%, Therefore the COD of the 40% would not happen until the 60% was completely paid. That is I would guess the 40% cancellation would contingent, not happen, until the 60% was completed paid.on | |
