An on-screen caption during the segment reported the
actual average to be 13.4 percent, according to Bankrate.com. The
same
Web site accessed at time of publication showed the average rate
Americans are paying on credit cards is from 9.8 to 13.55 percent.
None of the In the Money crew corrected Mierzwinskis error.
While Serwer agreed with Mierzwinski that the
newly-enacted minimum balance requirement is a good policy because
it forces heavy credit card spenders to pay back more of their debt
each month, he also tag-teamed with him to attack the banking
industry, asking why Congress doesnt impose a national cap on
interest rates.
Why not regulate the interest rates that the banks
charge on these cards, the CNN business contributor asked Ed
Mierzwinski, consumer program director for Ralph Naders advocacy
group. It's usury, you know, its seven, 16 percent APRs why dont
they attack that, demanded the Fortune magazine editor, echoing
Cafferty.
USPIRGs spokesman replied that federal courts have
ruled that credit cards companies are governed by state law based on
where they incorporate, so that a bank can move to South Dakota
where there are no usury ceilings and treat everybody around the
country as if they lived in South Dakota with those bad laws.
Mierzwinskis argument rang hollow. South Dakota may
have no usury law, but credit card-holders enjoy rates similar to
the nationwide average, according to figures available from
BankRate.com.
Additionally, economists argued that to impose an
interest rate cap would do more harm than good. The
Federal Reserve Bank of Chicago explained on its Web site that
when the legal ceiling is below the market rate of interest, the
regulation can affect the market outcome. An interest rate cap at
about seven percent, for example, would lead to a credit crunch.
[E]stablishing a lower-than-market interest rate by means of a
usury ceiling will also bring about a decrease in the quantity of
credit supplied. Given lenders costs, the amount of credit they will
provide when the interest rate is held down is limited, according
to the Chicago Feds Web page.
Towards the end of the interview, Mierzwinski whose
political leanings were never disclosed by the In the Money team
charged that marketing practices of credit card-issuing banks were
deceitful and dishonest before plugging a USPIRG Web site critical
of credit card issuers. At no point in the program was a banking
industry representative brought on to challenge the anti-industry
views pushed by USPIRG or to talk Cafferty down from the ledge, or
out of the bus lane, as the case may be.
In the Money Crew Rams Viewers Like a Bus With anti-Banking Bias
January 9th, 2006 2:00 PM
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