This article is special, I am awfully too excited and I can’t really contain my excitement if I am being frank with you all. Today we get to bully Americas favorite politicians… Alexandria Ocasio-Cortez New Yorks 14th district US representative and Bernie Sanders Vermont’s Senator.
And by bully, I mean discuss about their poorly written legislation that these two made in regards to place a cap on credit card interest rates and how they want the postal service to provide banking products?
*ring ring* hello? Oh… it’s for you AOC and Bernie, it’s 19th century USPS calling, saying that this whole idea on USPS being a bank (again [I’ll get to that later]) is fucking stupid.
NOW WITH THAT BEING SAID IT IS TIME FOR… drumroll please.. some disclaimers
In no way shape or form does this article represent my political views, I strongly hate all politicians, certain pieces of legislation are better than others. agree with ideas and common sense, not dick ride, suck, and swallow a single politician or party. The only reason as to why I have AOC and Sanders on the spotlight today is because their credit card cap idea is crap. But then you say to yourself “oh Jimmy, but Trump has shit legislation in place, why don’t you shit talk about him you conservative inbred” shut up, mainly because Trump is already an unlikable and hateable individual and it’s no fun writing an article about someone who all of America already hates and who would agree with me. AOC and Sanders are likable individuals and representing an idea that goes against the crowd/majority/current suddenly has me underneath the spotlight and will attract some (unwanted) attention and will be a topic of sensible discussion. (Maybe not sensible, someone will probably send angry emails at me.)
The piece of legislation
AOC and Sanders both stated that this legislation is being passed in order to serve and help the public by not allowing them to pay high interest rates on their cards, to relieve some credit card debt, to let low-income families have access to bank accounts, and for credit card companies to stop raking in billions in profit off of interest.
According to the Federal reserve, there is about $1 trillion in credit card debt
It all sounds great, you help the poor, you tell big business to go fuck themselves, you relieve some credit card debt over time. It sounds like a massive win for everyone except credit card companies. But fuck them, it’s all about representing the working class Americans. Right?
Debunking the legislation
Sanders and AOC state it’s unfair for consumers to pay 17 - 24% in interest for borrowed money, meanwhile banks can borrow at a record low 2.5% from the Federal Reserve.
Already, this statement is rubbish, while, yes, banks can borrow money at a 2.5% from the Fed, but that is usually for VERY short term borrowing. Usually for long term lending, the rates are bumped up. It also depends on the banks credit worthiness and how much they’re asking that determines the rate the bank pays. Wow, who knew banks are like people as well when it comes to deciding the interest they pay on a loan and how much they get.
If I were the Fed and was asked by Bank of America to let them borrow millions for the next few years, I’d consider the assets they have as collateral, their cash flow, income, amount of outstanding debt they owe, and so forth. Those numbers would be crunched up, they get their loan, with the paperwork that says “hey BofA, you pay 10% for the next few years for borrowing this money since you guys are really credit worthy of it.” Great, now on to the next client.
Deutsche Bank calls to borrow the same amount of money BofA asked earlier, sure enough when I look under the hood I see; declining income, a lot of outstanding debt, little assets for collateral (who is the idiot running this bank?) as the Fed, I feel as if Deutsche bank might not be able to pay back those millions, a risky borrower, I let them borrow, but naturally, as an unworthy credit borrower we let them pay a higher interest rate. “Okay Douchebag… erm, I mean, Deutsche… here is the check, however, your credit worthiness is really bad, so we’ll hit you with a 24.99% rate, also we’re letting you borrow 1/2 of what you asked for.”
USPS should not get into banking
A suggestion on behalf of Sanders and AOC was for the postal service to provide savings, checking accounts, and loans. Mainly for folks who do not have access to a bank account to have one. I mean, for starters, it’s the post office, not the post AND bank office.
“But wait Jimmy” you’re saying, “AOC mentioned that the post office used to provide those services” yeah they did, and they discontinued for a reason. It was due to lack off deposits, have you ever heard of a bank who had to close it’s doors for not having enough deposits? The post office already losses plenty of money, when it gets into an industry it has no business in, the post office in turn will flop and be a COMPLETE mess. Furthermore, where is the post office going to obtain the cash to lend out? Like I said, it’s already at a negative net income and is losing revenues year over year. It’s like Deutsche Bank.
Neither AOC or Sanders explained how the post office will obtain the technology, skills, and training needed to process, manage/oversee, monitor their consumers, etc. transactions, deposits, and be on the lookout for fraud. It was vague, they just said “the post office got this” and no explanation as to how they “got this.”
Earth to you two morons, nowadays, even the least wealthiest Americans have something they carry in their pocket, it’s called a smartphone. Utilize that to provide banking solutions to Americans that don’t have access to it, rather than using prehistoric offices that collect dust on a daily basis.
The next big idea is to fund the post office by taking a large percentage of the idiots who vote for this and approve of this act.
This legislation harms lower class and low FICO score Americans
In the current climate of interest rates, 15% on credit cards is not bad, average rate is a 17% for Americans with great credit scores. However, when credit card companies are restricted to only charging 15% or lower, the companies then have to fasten their belts and be VERY careful with who they let them borrow money or approve any credit cards. In turn, suddenly, your “great credit score” is deemed as too risky according to the credit card company and they may be reluctant to let you borrow money.
The Americans who already have a bad credit score or who have a limited amount of assets and little income, ultimately don’t get approved for any credit card/loan, they then find other means to find the borrowed money, typically through a black market or in illegal formats, and those alternatives come with higher (usually illegal) interest rates to borrow money. Ultimately, placing working class Americans into deeper debt, which is ironic since this legislation was suppose to prevent that and help them out?
Banks and credit card companies get greedy
If banks are not lending out as much in credit cards and loans as they were previously, the bank in term has to figure out ways to recuperate the loss in revenues and income. So they seek into charging a or charge a higher monthly fee on their accounts, increase the prices in the services and products they provide, in this case ATM fees, overdraft fees, and fees as such might jump. Still harming working class Americans since lower-income Americans are more prone to these fees than wealthier Americans.
This also means that if banks and credit card companies aren’t lending out as much, it means departments that are in charge of processing loans, screening candidates for loans, and so forth suddenly lose their jobs because there is not much work to do.
The math behind interest rates
So, why do banks and credit card companies charge what they charge? When you apply for a card, the banker who creates the application sends it to a different department who verifies your income, assets, identity, etc. just to make sure there isn’t any fraud. Then that asshole contacts some other asshole who is in charge of giving people FICO scores, and asks “hey, is Jimmy good at managing borrowed money?” Then as soon as he gets an answer, he then contacts another asshole who then crunches the numbers and takes the FICO score into consideration and… where was I going with this? Moral of the story, the world of banking is EXPENSIVE, they have staff to pay for, physical big offices that look nice to pay for, and to actually make a profit from all this rubbish, they charge you the rate they charge you.
This ain’t it Chief
This legislation is harmful, it’s bad for the macro-economy, it places jobs at risk, and it worsens financial situations for lower-income - moderate-income Americans.
Here’s better legislation, why don’t you fucking morons allocate resources and money towards schools to teach financial education, that way we don’t fall in a trap of falling into loads of debt, that way we learn how to budget and use our money fucking wisely, rather than going after companies that have LITERALLY done nothing wrong but their jobs.