Cuomo Outraged: Business Tries to Make Money From Customers!
Putting all those things together, it does seem to suggest that your industry is looking to make more money off its credit card holders. Do you deny that? -- Chris Cuomo to banking industry representative, GMA, Feb. 12, 2008.
This year's Media Research Center DisHonor Awards haven't been distributed yet, but we might already have a candidate for next year's competition . . .
Give banking industry representative Nessa Feddis, um, credit for not bursting out in laughter in response to Chris Cuomo's question. Yes, Chris, businesses are, well, in business. And the people from whom they make their money do tend to be their customers.
View video here.
Cuomo's query came in the course of a conversation with Feddis held after today's Good Morning America aired a classic of the Evil-Big-Business genre. The subject was credit card companies that are raising rates on some customers who have not been in default, despite falling Federal Reserve interest rates.
As is the rule for this type of segment, the most heartbreaking, least typical, anecdotal example was found. Meet Clarita Marie Gamble, a 72-year-old woman with emphysema, apparently dependent on an oxygen pump, and whose speaking voice was hampered by the tracheotomy she had undergone. We were told that Gamble takes care of her granddaughter every day after school.
CHRIS CUOMO: Last month she was shocked to learn that her credit card interest rate had jumped from roughly 16% to more than 26% [26.24% according to the screen graphic.] Carita lives on a fixed-income of $1,100 a month. The increase in the credit card bill took $400 more. That's a huge hit.
Note: if a 10% interest rate hike costs Carita $400/month, that would be $4,800/year, in turn suggesting, if my math is right, an unpaid balance of about $48,000. Carita's health problems could be the cause, but surely a credit card balance of that amount for a person with an annual income of $13,200 is unusual. By the way: at what interest rate would Chris lend money to a person in Carita's circumstances?
A bit later, we heard from Carita's adult daughter.
CUOMO: Carita Marie's daughter says she called Chase Bank, the credit card issuer, and was told her mother's rate jumped because she opened new credit card accounts. The higher rate was permanent. She feared for her mother's health.
DAUGHTER: I worry that she's not going to make it. Or she's going to have to sell her home. Or even that, we've looked into that, and yeah, it's hard.
And if evil Big Business is literally threatening Clarita's life, guess who the heroes are, riding to the rescue? The Democrats are coming!
CUOMO: Now, there may be some changes. Senator Carl Levin is trying to lead the charge [presumably on a white horse] in the Senate, conducting hearings and introducing legislation to stop banks from raising interest rates on customers who have paid their credit card bills on time. And so far, three of the major banks have volunteered to change their ways.
We then heard from Dem congresswoman Carolyn Maloney from New York, who declared that raising interest rates on people who have paid their bills on time is "totally unfair."
Levin's proposal to prohibit rate hikes is nothing less than government price controls. Throw in Maloney's sentiment, and perhaps we should establish a Federal Administration for the Setting of Totally Fair Prices.
For the record, here was the reply from Feddis, the banking industry rep, gently trying to explain the facts of free enterprise to Cuomo.
NESSA FEDDIS: Credit card companies are in a business to, we're in a competitive market, we're in a free market, but there is a lot of competition. There's so much competition that there's a pressure to keep rates down.