Years ago there was a limit on the intrest rates that Banks, Credit Unions, Title Pawn SHARKS could charge!! What happend to that?// Who changed the law to allow this crap?
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Two things you HAVE to read:
1.
http://www.creditfyi.com/Creditpedia/Credit-Basics/Credit-Laws-and-Legislation.htm
"In 1978, the U.S. Supreme Court heard the case of Marquette National Bank of Minneapolis v. First Omaha Service Corp. The court found that the National Banking Act of 1864 allowed a bank to charge its credit card customers the highest interest rate permitted in the bank's home state, regardless of where customers lived.1 In other words, "lex loci," or local law, ruled.
Credit card lenders began moving their base of operations to those states, notably Delaware and South Dakota; in South Dakota, where plans were already afoot to eliminate usury laws to stimulate the local economy, the governor welcomed these moves because they provided thousands of jobs.2 Not wanting to lose tax revenue, individual states began lowering their own usury rates in a bid to keep lending institutions from leaving. Ultimately, the entire market became deregulated in this fashion."
and
2.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/more/rise.html
An excerpt:
"In recent years, however, the credit card industry has found -- and aggressively exploited -- yet another rich vein of profits: penalty fees.As with interest rates, an obscure ruling by the U.S. Supreme Court, this one in 1996, cleared the way for higher fees.
Duncan A. MacDonald, a former general counsel of Citibank's credit card division, spearheaded the case. "We were working this thing here for a good cause, free-market pricing,'' he said in an interview. "The late fees that were common across the industry, up until [the Supreme Court ruling], were in the $5 and the $10 range. And the economic thinking was that there had to be flexibility to allow up to $15.'' Instead, Mr. MacDonald said, the decision "took the lid off,'' as fees quickly shot up from $15 to $29 to as high as $39.
"I certainly didn't imagine that someday we might've ended up creating Frankenstein,'' he said.
"It's been very dramatic,'' said Robert B. McKinley, founder and chairman of CardWeb and Ram Research, a payment card research firm. "A lot of banks didn't even charge an overlimit fee at that time."
Last year, penalty fees alone generated $12 billion in revenue. "
Read the whole thing of both those articles for a good perspective on how we ended up here.
