One might why are credit card companies being allowed to raise interest rates to an enormous 20% when the economy is in this trouble? It seems that something is moving in the right direction when it comes to cracking down on abusive credit card practices. Today President's economic advise Lawrence Summers tells that Obama is going to target credit card companies that are taking advantage of unsuspecting consumers by charging high interest rates.
High interest rates of credit cards put people in debt and further harm the economy. There has to be some reasonable limit of how much the interest rate can be for a credit card. Taking too much risk by charging a very high interest rate risks too many factors including the economy in general. If the person can't can't control his credit and can have only a high risk credit card may be that person shouldn't at all have a credit card and go by with a debit card until he or she brings his or her own spending under control.
Summers told Meet The Press "as for the financial markets, I can tell you that the president is pushing very hard for a very strong program of regulation that is going to correct many of the mistakes that were made last time around. He's going to be very focused in the very near term on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew they were getting themselves into. He's going to be pushing on issues relating to what's known as systemic risk, the, the concern that an institution gets itself into a situation where it becomes itself a source of risk to the whole, to the whole financial system. We'll have to see where things, where things go. And obviously, nobody's rooting for unhealthy banks. But I can assure you that the focus of everything this administration is doing is on the needs of the overall economy, is on the needs of getting a recovery well established."
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