15% Cap on Credit Card Interest Rates

Discussion in 'General Discussion' started by AlaskanAssassin, May 10, 2019.

  1. idestroyedthetoilet

    idestroyedthetoilet Well-Known Member

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    You must be easily triggered if you get worked up and worry about what people in Los Angeles do.
     

  2. LogGrad98

    LogGrad98 Well-Known Member Contributor

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    I know you don't actually read anything but both of the rentals I mentioned are 1400 sq ft in a middle class area in Redlands. And unemployment here dipped below 3% recently so there are many many jobs here, in fact we are facing a shortage of workers in a big way. We just recently raised our wages to be more competitive in the local market. So it's all market driven, a capitalist Utopia of higher wages, plentiful jobs, and nowhere to live.

    Your argument about going elsewhere is highly unreasonable by the way. Most of these people won't find jobs out of state that will relocate them and there is almost no way they can relocate themselves. You make it sound so easy to flit around the country, ever tried it on 14 bucks an hour?
     
    fishonjazz likes this.
  3. LogGrad98

    LogGrad98 Well-Known Member Contributor

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    These are rentals. Most houses here are selling to rental companies, I think the last report I read was that 60% of single family home sales were to rental companies.
     
  4. NUMBERICA

    NUMBERICA Well-Known Member

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    Do you know anything about history? Or data? Or that other places besides the US exist?
     
  5. framer

    framer Well-Known Member

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    Yeah, but part of the shortage problem is that people are never going to leave a home that they are paying 1980's property tax on, especially when those property tax rates have skyrocketed like they have. The won't leave even if a different sized home or another area might make sense to them. This has stunted the market for rentals and home ownership. The same thing applies for New York City rent controls.
     
  6. framer

    framer Well-Known Member

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    Amen, brother.
     
  7. reignman40

    reignman40 Well-Known Member

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    Yeah that's a b****** price for a 1400 sq ft house. Sell that **** while its high and go buy something bigger in a different area for 250k.

    EDIT: Didn't know they were renting, in LA/Calif of all places. Get the hell out of LA I say..
     
    Last edited: May 13, 2019
  8. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    I thought this was a good point. I think if they are trying to fix the actual issue, it's a mix of assistance to the poor (welfare type assistance, job training, tax credits) and some training to assist people in learning to live within their means. If the 2nd part doesn't happen, I'm not sure anything else the government does can help.
     
    checkbookdoc likes this.
  9. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    I'm not saying that lenders aren't screwing over some people, but it's hard to really prove that they are all in cahoots to ensure that the poor stay poor through high interest rates. I tend to assume that most people are good people. I think it's primarily driven by the default rates among "risky" (poor) borrowers.
     
  10. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    1- When two parties enter into a mutually agreed-upon arrangement (no coercion), I believe the argument to apply regulation would need to come from the government side.
    2- Who has the right to define what usury is? At various points in history charging ANY interest on loans was considered usury.

    I'm not opposed to the government stepping in to try and help people that actually need it, but just capping interest rates seems arbitrary and is unlikely to actually help people get out of debt. If anything, it might encourage people just to borrow more.
     
  11. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    I agree that if regulation is passed, it does need to protect both sides. I'm not sure if everyone is aware of how many scumbags rack up a ton of credit card on electronics, vacations, etc. knowing that they will be declaring bankruptcy in the near future and that the debt will be wiped clean.
     
    The Thriller likes this.
  12. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    While I don't know the deep details of Obama's Credit Card Act, this is at least legislation that makes some sense. Consumers were not understanding what the lenders were doing (hidden fees that most would have trouble understanding) and the government required more transparency to protect borrowers.
     
  13. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    From my understanding, there are lots of capitalists that want to invest and bring additional affordable housing to places like LA and San Francisco. Unfortunately, the local governments don't want to let them do that. They place so much red tape that it's virtually impossible. I watched a John Stossel video once that described trying to build new housing in San Francisco as virtually impossible. Essentially, local people don't want new housing, because that will only lower the value of their properties.
     
  14. One Brow

    One Brow Well-Known Member

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    I'm not sure what to tell you if you don't think the lenders know that people will make poor long-term decisions, and rely on that to take advantage of the poor.
     
  15. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    All that you have clarified is that poor people are more prone to making bad long-term decisions. That's not the lender's fault. Should we be focused on helping people make better long-term decisions, or restricting legal, non-coerced transactions?

    Is capping interest rates the solution to fix the issue and help poor people get out of debt? If a 20% rate is necessary for lenders to break even on these high-risk loans and defaults (I have no idea what the actual break even % is) then capping the rate at 15% is going to restrict borrowing on those who might genuinely need it.
     
  16. One Brow

    One Brow Well-Known Member

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    Wow, you sure have a sense of entitlement. I said, "people will make poor long-term decisions", which is equally true regardless of their financial status. However, poor people are less able to recover from these bad decisions.

    It's much more difficult to change human cognitive processing than to protect people from their own tendency to make bad decisions. Still, if you have a plan for helping people avoid hyperbolic discounting, I'm all ears.

    It helps them avoid debt in the first place.

    In reality, the people who get these credit cards make current purchases using present bias and unrealistic assumptions about their ability to pay them off.
     
  17. AlaskanAssassin

    AlaskanAssassin Well-Known Member

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    How do I have a sense of entitlement? I agree that poor people are less able to recover from bad decisions. However, in general, poorer people have a tendency to make worse long-term financial decisions. Denying this would be to deny that personal choices have an impact on an individual's prosperity. I grew up in a shoddy trailer park. Trust me, most of the reasons my parents lived there were due to their personal choices in life.

    I wish that high schools required a basic personal finance class that emphasized avoiding debt and living within your means. I think it should be required to graduate. If this class was run well I think it could have a strong impact on a lot of people's lives.

    I want them to avoid debt too. I wish we could accomplish it without restricting their free-will.
     
  18. One Brow

    One Brow Well-Known Member

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    Yeah, that's what I mean about a sense of entitlement right there. Our tendency to blame poor people for their status in the world.

    They all do. Sometimes, if you are on the STEM track, you don't take them, but every high school curriculum I have see has included some sort of "Consumer Math" or "Personal Math". However, you can't lecture cognitive biases from people's minds.

    We have to craft public policy to deal with who humans are, not who we think we want them to be.
     
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  19. fishonjazz

    fishonjazz Well-Known Member Contributor 2019 Award Winner 2018 Award Winner

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    This.
    People that use the argument "well if they don't like it they should just move" are idiots. Moving isn't easy or cheap for most people.
    Hack is an idiot though so no surprises here.

    Sent from my ONEPLUS A6013 using JazzFanz mobile app
     
    LogGrad98 likes this.
  20. checkbookdoc

    checkbookdoc Well-Known Member

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    Wow, I can't believe this is happening... I actually talked myself into agreeing with AOC and Bernie. But only because I think people are bad at sacrificing in the present in exchange for benefits long-term even if they are educated (e.g., ~16% of Americans still smoke and we all know that is dumb). I see this as a nice way of limiting the amount of credit offered to poor people, except democrats would be upset if packaged that way so they instead focus on the interest rate.

    Also, I am assuming that this proposal is backed by studies which find the cost to society from entering into credit card debt is greater than the benefit (otherwise why are we even discussing this).
     

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