Here we go again!
What's the difference between Somali pirates and credit card executives?
If you ask a growing number of Americans - many of whom have been hit with higher interest rates recently - not much.
According to a Fox News report (Apr. 23), "'Bank of America is doing the most dramatic changes I've seen,' said Emily Peters, a personal-finance expert for Credit.com. She said she has heard of cases where BofA card rates have been going up 10 to 20 percentage points."
In a meeting yesterday (Apr. 23) with executives from 14 credit card companies, including Visa, MasterCard, Bank of America and Chase, President Obama warned companies to change their ways to help consumers or face action by Congress.
In a press conference last week (Apr. 16) Secretary of State Hillary Clinton warned Somali pirates that the U.S. will track down and freeze all money used by the pirates to fund their operations on the Indian Ocean.
It's the money, stupid -
When interviewed, a spokesman for the pirates, Sugule Ali said, "We just saw a big ship. So we stopped it." When the pirates discovered that the ship's cargo contained $30 million in heavy weaponry, Ali insisted "We are not going to offload the weapons. We just want the money." The pirates were asking for $20 million in cash. "We don't use any other system than cash," but added that they're willing to negotiate. "That's deal-making," Ali said.
When interviewed about the rising interest rates for customers, Bank of America spokeswoman Betty Reiss told ABC News, "[it's] about properly pricing our portfolio either based on risk or realigning a portion of the portfolio that is priced below what is prudent in the current market."
The threat of action -
"The days of any-time, any-reason rate hikes and late-fee traps have to end," President Obama said after his meeting with credit card executives. "No more fine print, no more confusing terms and conditions." The president made clear to executives at the special White House meeting "...that he intends to back efforts to crack down on what lawmakers consider to be deceptive practices..."
"We have noticed that the pirates are buying more and more sophisticated equipment...," Mrs. Clinton said. "They are clearly using their ransom money for their benefit - both personally and on behalf of their piracy. We think we can begin to try and track and prevent that from happening," she said. "We may be dealing with a 17th-century crime, but we need to bring 21st-century solutions to bear."
One solution -
Wait a second, maybe there's another solution here. Maybe the two should work together; share the risk and the reward. Why not have Betty Reiss jump into the pirate boat and work the RPG, while Sugule Ali works the BofA portfolio?
I know what you're thinking; too much risk... for the pirates.
Maybe Bank of America should just redesign their logo to carry a skull and crossbones, and change the Annual Percentage Rate to read - APRrrgh!
Jim Lichtman's commentaries can be found three times a week at www.ethicsStupid.com.