Shuster Gets Emotionally Animated Over Credit Card Interest Rates
Separating personal feelings from straight-up journalism is something MSNBC anchors have had trouble with in the past, and David Shuster is no exception.
During MSNBCâ€™s daytime news coverage on April 24, Shuster interviewed Bill Himpler of the American Financial Services Association. The discussion was nominally about the legislation sponsored by Sens. Chris Dodd (D-Conn.) and Chuck Schumer (D-N.Y.), designed to freeze credit card rates, it became more about Shusterâ€™s view that credit card companies are gouging their customers. Throughout the four-minute interview, Shuster threw out anti-business questions and occasional hyperbole.
Shuster asked Himpler, â€śWhy are credit card companies raising interest rates continually?â€ť
â€śWell, as the market progresses, we've dealt with new regulations from the federal reserve that just came out in December,â€ť Himpler replied. â€śThose will be in implemented over the coming months, well into next year. And they do contain restrictions that ultimately are going to lessen the flexibility that lenders have to price for risk.â€ť
â€śI understand that,â€ť Shuster shot back â€śThey start in July. Isn't this then the case that you have the credit card companies essentially taking advantage of the window of opportunity, the first seven months of this year, before the regulations go into effect, to essentially raise credit card rates, sometimes as high as 28 percent. How do the credit card companies justify that given, as you said, this is not the time to be essentially squeezing credit?â€ť
Although there has been a trend in increases of credit card interest rates, Shuster omitted the reality that many banks are facing. From the depressed housing market, loan defaults, credit card defaults and other economic travails, companies have been forced to reexamine risk. Their lower appetite for risk brings higher fees and rates. As Himpler pointed out, credit cards represent the highest risk banks face in terms of lending.
Himpler also stated that rate increases often stem from people taking out multiple lines of credit. To credit card companies, the more lines of credit a customer has, the higher the risk of default. Shuster could not fathom why these were risky borrowers.
â€śThat's the thing. You can do â€“ Bill, you can do whatever you want. You can get 100 lines of credit. If I loan you $100 and you pay me back, that's fine. That doesn't give me the authority to say, wait a second, Bill's getting other lines of credit, therefore I should jack up his rate to me.â€ť
Himpler merely replied, â€śIt does make you a greater risk. It's that plain and simple.â€ť