Among the consequences of this questionable lending practice were higher interest rates for qualified customers to protect lenders against the almost certain losses involving low-income borrowers.
When the housing bubble Sen. Dodd helped to inflate collapsed and the economy tanked, Sen. Dodd was front-and-center in the government's effort to bail out financial institutions, including AIG and the predatory subprime lenders who contributed big bucks to his campaigns, and high-rick lenders in default or foreclosure. The nearly $1 trillion cost ultimately will be borne by taxpayers whom President Obama and Sen. Dodd and other congressional Democrats are punishing simply because they were smart enough not to overextend themselves when they got into the housing market and otherwise have been astute managers of their money.
Later, Congress enacted Sen. Dodd's sweeping overhaul of the credit-card industry, and again, responsible cardholders took it in the neck.
Though the reforms won't be implemented fully until February, card companies already are raising rates and lowering credit lines for the creditworthy even as their own borrowing costs are decreasing and their profit margins are rising. With profits rising, the companies will be better able to afford to afford to reward Sen. Dodd with campaign contributions.
They also are reducing or discontinuing rewards programs, which are popular among people who pay off their cards ever month; imposing annual fees for cards and higher fees for balance transfers and cash advances; and going from fixed to variable rates on their cards to compensate for losses related to the additional mandated benefits intended to protect reckless customers who carry high balances.
Sen. Dodd will follow these abuses of play-by-the-rules Americans with greater protections for scofflaws who overdraw their checking accounts. Overdrafts, of course, are the consumers' way of writing themselves unilateral, unsecured loans. The fees the banks charge may seem onerous to Sen. Dodd and those who have to pay them, but they are needed to cover banks' costs and to discourage customers from writing bad checks, which last we checked was a crime.
If Sen. Dodd and his cronies succeed in dictating smaller fees and other "protections" for scofflaws, who do you think the banks will ask to make the difference? Based on Sen. Dodd's record, he's probably OK with that.