New credit crunch coming?

People are justifiably furious over credit card companies rapidly pushing up interest rates in face of possible Congressional limits. But, that is only half the story. These companies are now pushing securitized investments based upon the projected cash flow from those 30 percent plus charges.

This accomplishes two things. First, Wall Street again gets to rake off outrageous upfront fees on bonds that may well default. Second, if Congress belatedly wishes to stop usury, it will be confronted with this widespread cancer — securitized high credit card interest rate-based bonds — throughout the financial system.

These bonds will be pushed on unsuspecting or unscrupulous pension funds and retirement account managers. Congress will be told, if you limit interest rates, these bonds are likely to go into default. You either let us keep high rates or bail us out.

It is subprime slime all over again. 

Thomas Stroud

Overland Park

Comments

[NoMoreMrNiceGuy]

I continue to winder why this is not reported in the news.

http://www.auditor.mo.gov/news/20071018csd.htm

[NoMoreMrNiceGuy]

WHile I have little sympathy for banks and dishonest crditors, I have equal sympathy for homebuyers that knowingly buy too much house, bury themselves in credit debt and then have to hear idiots like Barney Frank that had ovesight and knew what was happening do nothing about it.

[STL]

If there are any unsuspecting pension funds left around after all the previous bubbles they've surely experienced, shouldn't their directors and managers be fired for even considering these risky high yield securities which are likely to default sooner rather than later? And shouldn't any unscrupulous pension funds be shut down with the funds disbursed to the retirees and workers?

I mean what ever happened to a fool and his money are soon parted? Stupid is what stupid does! Well you say it's not "their" money, agreed, but what about their directors and those responsible for watching over them? Are they AWOL or merely bought off?

Otherwise what we have here is the bankster gangster Wall Streeters, who by the way were bailed out by Uncle Sam, doing what they do best, selling junk paper to greedy investors. This is an old story.