Monday, February 22, 2010

Gotta Give 'em Credit

If the CEO of a "Public" company with a stock that trades on the stock market were to leak information that helped a friend buy or sell that stock he could be prosecuted. Actually they could both go to jail as that phony of the fashion field Martha Stewart found out a while back.

There are laws against this practice of insider trading and for good reason since it gives those in control an unfair advantage over the rest of us schnooks.

This law is good and should continue.

Don't worry, it is not up for consideration but knowing how good it is isn't it time to extend the spirit of that law to other practices?

One case in point is about to rear its incredibly ugly pustule filled face on the public. And nearly every man woman and child will be affected or infected.

I am speaking of credit cards.

Today a new supposed so-called consumer protection type law goes into effect aimed at reigning in unfair and fraudulent practices by the credit card industry.

BUT our government, who really doesn't want to hurt any of the geese who lay golden eggs in their nests decided to lay out the particulars of the law MONTHS AGO!

The credit card companies, AKA banks had so much time to find the loopholes in the new law that many of them were ready to send out printed forms to their customers before New Years Eve.

And to make matters worse many of these same 'bailed out with our money' entities raised the rates and performed other forms of unfair practice during the many months in between passage and enactment of the law.

We can debate the issues all day long but there is one way to tell if all the measures being put in place are good for Americans or not. Check out the stock prices of the companies being legislated against.

Just like the health care industry whose stocks are hitting new highs every day so too are the credit card companies moving on up.

I don't mean to say that every issue is a "we vs. they" one but many appear to be. And to let one side know before hand what the new rules are going to be seems to be a bit like insider trading.


Mark Surks said...

Your so right. I used to be a bank examiner (and you thought I used to work at Squires). In the early 70's, banks were highly regulated. Too big to fail was an impossibility because branching was limited to 5 contiguous counties. Now a bank based in San Francisco can branch all over the country, largely by combining with other banks. Certainly the public isn't served by this consolidation that has taken place in the industry. Only the bankers have benefited. What we are left with is a phenomena known as too big to fail.
Years ago on a trip to Vegas they introduced a new form of Blackjack. See the dealers hole card. You find yourself hitting on 18 and 19. Man how can you lose! Well, you do. Like the bankers, the casinos found a work around. In the case of the casinos, they changed the rules that the player loses on the push and blackjack only pays 1:1. That was enough of a workaround to offset the advantage of seeing the hole card. Well, the banks have found their workarounds to offset the impact of the new legislation.

mug guy said...

Right now the only thing in this country that is too big to fail is the country itself, at least according to China!