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Monday, the state was presented with the downcast rural face of the banking crisis -- the fallout in Greeley of the bad loans and shrinking reserves that mark the nation's economic reality. How many more Greeleys should we expect to see in the next few months? According to the influential Baseline Scenario bloggers, it depends on who wins in the great and mostly unreported battle that's waging between the Finance Industry and the American People.
The failure of the $2 billion New Frontier Bank of Greeley April 10 has left farmers and dairy owners struggling to find agriculture loans to finance the impending growing season, The Greeley Tribune reports. “This is the time of year when farmers need to rely on a line of credit,” said Tony Miller, president of First FarmBank of Greeley.
Colorado banking regulators shut down the $2 billion New Frontier Bank of Greeley Friday night and federal officials stepped in to cover insured deposits after no buyer could be found, the Federal Deposit Insurance Corporation announced. It's the largest bank failure in the nation so far this year and the second Colorado bank to go under following the failure last month of Colorado National Bank in Colorado Springs.
Hidden penalties, sudden interest rate hikes, and deceptive language are just a few of the questionable tactics used by credit card companies to extract money from increasingly stressed consumers. Now, some on Capitol Hill are trying to regulate the more abusive practices. With bills actually moving through both houses of Congress, the credit card lobby is finding itself on the defensive, and turning out in force to oppose the legislation.
Americans are more conscious of debt than ever. Feeling burned by bank overdraft fees of $30 or more, or by credit-card interest rates that can top 25 percent, a growing number of consumers are turning to prepaid, reloadable “cash cards.” For a large segment of users, primarily low- and moderate-income consumers, these cards function as ersatz bank accounts. These consumers are referred to as the “unbanked” in card-industry parlance. With a cash card, those with poor credit or too little money to meet banks’ minimum account balance requirements can participate in the retail transactions most people take for granted: ordering goods online, paying for items with a quick swipe, getting cash on demand from ATMs.
Newly-minted Sen. Mark Udall (D-Col.), has scheduled a press call this afternoon to announce his plans to introduce legislation to end the abusive practices of credit card issuers. This isn’t enormous news — as a member of the House, Udall had strongly supported the lower chamber’s version of the Credit Cardholders Bill of Rights, sponsored by Rep. Carolyn Maloney (D-N.Y.), and he has vowed since the election to introduce the same bill in the Senate. But his push in the Senate is interesting for several reasons.
After a full year of woefully inadequate government responses to dire economic conditions, President-elect Barack Obama will inherit an economy that faces challenges on just about every front. Progressive media has been keeping a spotlight on low wages, abusive credit card policies and weak student loan programs of late, while maintaining a focus on Obama's pending economic recovery package.
Dissatisfied with the timing and sweep of new federal rules designed to protect credit card users from the banks that bill them, some well-placed Democrats are vowing to push stronger, more immediate reforms next year. With the banking industry already reeling from the economic downturn, however, the opposition to such a move could be fiercer than ever.
As the presidential campaign heats up, the candidates are sure to intensify their differences on national security, the Iraq war and tax relief for the middle class, and they’ll no doubt tear into each other’s positions during the coming debates. But, based on the contest so far, don’t look for either Sen. Barack Obama or Sen. John McCain to take on the biggest, most troublesome economic problem facing many American families and financial institutions — the credit crunch.