Unreal.
1 Like
Your surprised? This is what a weaponized judiciary looks like.
1 Like
We did something similar in the 80s. It led to a pricing collapse which combined with slowing economy and led to massive lender losses. You probably remember the Savings and Loan crisis.
And this was inevitable. How is this different than what Jimmy Carter did with gas price caps? Hint: it’s not. Companies would stop lending. The economy and the market would plummet.
'Yikes’: Credit-card stocks sink after Trmp warning
The banks or institutions that issue the co-branded cards would take the
biggest hit in earnings. But true Visa and Mastercard are down just slightly
now.
Quick Read
Government controls is not a good solution to the problem.
But hey, they have already stepped into 5 other companies, so maybe this will
be okay with Congress too.
The government’s acquisitions include a 10% stake in semiconductor giant Intel Corp. (NASDAQ:INTC), a 15% stake in rare earth producer MP Materials (NYSE:MP), a 10% stake in Lithium Americas Corp. (NYSE:LAC), a 10% stake in Trilogy Metals Inc. (NYSE:TMQ), and a “golden share” in US Steel Corporation.
Silver on its way to $100. Wow. People are on edge.
We used to have Usury laws and, quite honestly, some of the rates credit cards charge are usurious. Unfortunately, Congress gets too much money from the bank/card industry to make a change.
I think 10% for an unsecured loan is too low but it’s only for 1 year. Not sure what the answer is but the FTC should be able to put ceiling rates in place based on credit score…
The first step will be a lower spending limit for higher risk card holders and more stringent requirements to be approved for a card.
1 Like
Arkansas, which already enforces a 17% cap on credit card interest rates, offers a real-world example. A study by the Federal Reserve published in 2023 found evidence that the cap made it tougher for higher-risk consumers in the state to access credit markets.
1 Like
Wow.
Huh ?
We still have those laws.
Background —-
While most states have usury laws, national banks can charge the highest interest rate allowed in the bank’s home state — not the cardholder’s. So, while you may live in Arkansas where the maximum interest rate is 17 percent, your card issuer can charge you a higher amount if it has its headquarters in a different state with a higher maximum rate. And if your issuer is based in a state like Maine, with no usury laws, you have even less protection.
And from WalletHub—-
Because of the federal actions that rendered usury regulations functionally irrelevant, there is virtually no interest rate cap applicable to credit cards today. Competition among credit card companies and banks remains the only factor keeping interest rates at their present levels.
Today the highest credit card rate goes as high as 36 percent, much higher than the 24 percent cap set by states with tighter usury limits. While the 36 percent rate is considered usurious under many states’ usury laws, that figure is nonetheless legal. So long as the rate is listed on your cardholder agreement and you agree to it, the deal is kosher.
One positive effect of deregulating credit card rates involved extending credit to more consumers across the country. It amounted to more choices and increased consumer access to capital. At the same time, however, widespread credit card availability allowed Americans’ overall debt levels to soar over the next several decades.
Like I posted, we used to have usury laws
I’ve read stories that the T-r-u-m-p Admin’s goal is returning to a pre-1951-style Fed that is less independent and works more closely with the US Treasury. So, I asked Grok for a Fed history.
Note the last section on high levels of debt forcing fiscal dominance of the Treasury over the Fed.
(Again, [1] take Grok, and all AI, with a grain of salt and [2] I’ve got no dog in this political fight.)
Establishment of the Federal Reserve System
The Federal Reserve System was established on December 23, 1913, through the Federal Reserve Act, signed into law by President Woodrow Wilson. The Act created a decentralized central banking system comprising 12 regional Reserve Banks and a Federal Reserve Board in Washington, D.C., to address recurring financial panics and provide elastic currency. The initial structure included the Secretary of the Treasury as ex-officio chairman of the Board and the Comptroller of the Currency as a member, reflecting limited independence and close ties to the executive branch.
Early Operations and World War I (1914–1918)
Operations began in 1914. During World War I, the Federal Reserve supported U.S. Treasury war financing by purchasing government securities and maintaining low interest rates, subordinating monetary policy to fiscal needs.
Interwar Period and Reforms (1919–1939)
Post-World War I, the Federal Reserve pursued more independent policies, focusing on price stability and economic growth. The Banking Act of 1933 and the Banking Act of 1935 restructured the system: the 1933 Act removed the Secretary of the Treasury and Comptroller of the Currency from Board membership, while the 1935 Act renamed it the Board of Governors, centralized authority, and extended governors’ terms to 14 years to enhance insulation from political pressure. Despite these steps, the Federal Reserve’s response to the Great Depression drew criticism for insufficient action.
World War II and Postwar Period (1940–1950)
During World War II, starting in April 1942, the Federal Reserve committed to pegging interest rates on U.S. Treasury securities at low levels (e.g., 0.375% on 90-day bills, 2.5% on long-term bonds) to facilitate low-cost government borrowing for war efforts. This arrangement continued postwar, as the Treasury prioritized managing a large public debt amid rising inflation. The Federal Reserve sought to raise rates to curb inflation, leading to tensions. By 1947–1950, inflation pressures intensified, and Federal Reserve officials, including Chairman Marriner Eccles and later Thomas McCabe, advocated for policy flexibility, but Treasury Secretary John Snyder resisted.
The 1951 Treasury-Federal Reserve Accord
Negotiations culminated in the Treasury-Federal Reserve Accord, announced on March 4, 1951. The agreement ended the interest rate peg, allowing the Federal Reserve to conduct monetary policy independently of Treasury debt management objectives. Key terms included the Treasury refinancing short-term debt into longer maturities and the Federal Reserve supporting orderly markets without fixed rates. This Accord marked a pivotal shift toward greater central bank independence, separating monetary policy from fiscal policy and enabling the Federal Reserve to prioritize economic stability.
Post-1951 Evolution of Independence
The Accord solidified the Federal Reserve’s operational independence. Subsequent legislation, including the Federal Reserve Reform Act of 1977, formalized its dual mandate of maximum employment and stable prices, while requiring semiannual reports to Congress for accountability. Independence remains structured to balance autonomy with oversight: the President appoints Board members (subject to Senate confirmation), but the Federal Reserve funds itself via operations, not congressional appropriations.
Current US Debt, Fiscal Dominance, and Fed Independence
Fiscal dominance occurs when unsustainable fiscal policy forces the central bank to subordinate monetary policy to government debt management, such as by maintaining low interest rates to reduce borrowing costs, potentially leading to higher inflation and reduced policy effectiveness. Former Treasury Secretary Janet Yellen has warned that the $38 trillion debt approaches a threshold where fiscal dominance could constrain the Federal Reserve’s ability to address inflation and unemployment independently. This includes risks of elevated term premia, higher borrowing costs, and investor concerns over inflation or financial repression.
The current sustained extreme US debt levels elevate the probability of fiscal dominance eroding Fed independence.
| Loan type | Typical APR Range |
|---|---|
| Payday loan | 261% to over 782% |
| Credit card | 15% to 30% |
| Personal loan | 6% to 36% |
| Credit union loan | As low as 10% to 12% |
Credit unions govern themselves to some extent - I think they have a 17 or 18% cap on credit card interest.
Payday loans are obscene, IMO, and shouldn’t be allowed. They take advantage of desperate, financially illiterate borrowers who “see” money now and not the pain that comes later.
Google —
Numerous officers and senior enlisted leaders have testified before Congress about the problem of junior enlisted personnel and their families, including married men, being targeted by predatory lending and facing significant financial hardships.
Key points from the testimony and related reports include:
- Impact on Readiness: A 2006 Department of Defense (DoD) report to Congress stated that predatory lending “undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force”.
- Targeting: Testimony has consistently shown that military members, particularly junior enlisted personnel who may be receiving their first steady paycheck, are disproportionately targeted by predatory lenders offering high-cost loans (e.g., payday loans with 400% interest rates).
- Security Clearance Risks: Financial problems have led to a significant increase in revoked or denied security clearances, as debt can make service members vulnerable to various risks.
- Congressional Action: The testimony and reports led to the passage of the Military Lending Act (MLA) in 2006, which caps interest rates on certain loans for service members and their dependents at 36%.
- Ongoing Issues: More recent testimony (as recent as 2024 and 2025) from senior enlisted leaders has focused on broader quality-of-life concerns, including inadequate pay, poor housing conditions, and the need for food banks, indicating that financial stress remains a persistent problem in the lower ranks.
The testimony focuses on the systemic issues and external threats (like predatory lenders) that create a cycle of debt and financial instability, which impacts the force’s overall effectiveness.
Negative; states still have them. But their
effectiveness is limited by laws in other states in which a company does business. So what
you say is technically incorrect.
But it’s interesting you now want people that
signed a terms of use contract to get a break
and break the agreement.
Is a law that is no longer effective actually a law?
Fair question, but yes state law would apply to entities that incorporate in that state. It’s effective in that state. Effectiveness of said law is certainly debatable
when cards are issued through entities that incorporate in Delaware or say Maine.
But let’s not forget nobody made the card user take a card with a given rate. They
essentially agreed to contracted rates but now expect a bailout. They could have shopped for lower rate cards or obtained a secured loan or done something else.
Really seems a reach for a “conservative” to advocate for federal mandate to
supersede individual contracts for a “year” with lower rates. Is that trying to buy
votes ?
If the economy is so robust, why force lower rates on lenders to benefit consumers ?