Consumer credit has become a monster. It is a monster that eats away at family security. It produces monster profits for certain lenders. And the monster has grown big enough to bully Congress and state legislatures. What will it take to tame this beast?
I’d like to announce the arrival of a knight wielding a spear, but change is more likely to start with small steps. I see four from the past few weeks:
One, Congressional hearings. When Congress calls for hearings on credit practices, attitudes begin to change. Senator Dodd and Senator Levin have changed the comfortable assumptions that creditors will always run the show in Washington.
Two, a popular story. My nominee is James Scurlock’s new movie, Maxed Out. It is showing in theaters across the country. Take a look at the summary from Nightline: http://www.maxedoutbuzz.com/
Three, an Enron moment. Sometimes something terrible happens that is big enough and important enough that the usual power brokers in Congress can’t hold back the tide. With 1.2 families moved out of their homes in foreclosures last year, and another 1.5 families likely to be pushed out this year, the moment may come soon.
Four, someone breaks ranks. Citibank announced that it was dropping universal default. Chase said it would introduce consumer-friendly practices. Cards with names like “clear and simple” are starting to emerge.
Are these four changes enough to cage the monster? Heck no. This is a powerful beast, and finding ways to contain it will be a serious challenge.
The current changes are tentative, and they could disappear like a puff of smoke. But, for now, they seem to be getting the monster’s attention. That’s a good place to start.
