Unforgiven: Credit Card Plea Denied
Big credit card issuers including Chase, Bank of America, Discover and Citibank banded together with consumer groups pleading for mercy from the Treasury Department.
The regulators have spoken and like the cashier at a Palm Beach Publix when Ann Coulter attempted a credit card purchase back in February, the answer is…DENIED!
About two weeks ago, a request was submitted to the Treasury Department by the Financial Services Roundtable (representative of the banks, etc.) and the Consumer Federation of America. Last night, news broke that the request was rejected.
According to AP reports, the proposal allowed credit card companies to forgive of up to 40 percent of debt per person. Each credit card holder could delay payment of income taxes owed on their forgiven debt until after the remainder of the debt was paid off. The credit card companies would wait until the remaining debt was paid off to book their losses on the forgiven portion.
I can see how lowering balances and lengthening repayment terms would help borrowers (look at the government and AIG). I can also see how this would help debtors. The delayed recognition of losses can make a company look more profitable than it actually is. This can make a company look more attractive to investors and lead to a higher stock price. So again, we have banks coming together to aid the consumer and again, we know that they want to aid their bottom lines as well.
FYI: just like mortgages were used to back bonds so too are credit card receivables. If the receivables are not received then we are in for more write-offs, write-downs and losses. :(
Tags: ann coulter, chase, consumer federation of america, credit card, discover, treasury departmentRelated Stories
POSTED IN: Consumer Debt, Corporate, Economy, Investment, Market, News, Uncategorized
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