In 2008, the banks that had caused the financial crisis in the first place–and they bear literally 100% of the blame–did something that was spectacularly wrongheaded and stupid. But hey, they’re banks, right? Every major US bank jacked up interest on its credit card portfolio. Suddenly, in a time of such crisis, many banks abruptly doubled the interest rate on most or even all of their credit cards. This had exactly the same effect on the pocketbooks of consumers as a tax increase. But it was worse than a tax increase, because it also sent a message that credit cards are dangerous and should be used sparingly, if at all.
We are constantly hearing a grotesque mantra that there should be less government regulation. This is completely incorrect. What we need is effective government regulation, and we don’t have it. The reduction of regulatory authority that took place during the Bush administration was abused by the banks, who went out en masse to grant dubious mortgages to people who should not have gotten them–and worse, to convince those people that they actually could afford the loans, knowing perfectly well what would happen in the end.
If we want our enconomy to start moving again, the first thing we need to do is regulate credit card interest. Rates need to be rolled back across the board to a national cap, and if that means that the banks are afraid to extend credit to people who aren’t creditworthy, then good. They shouldn’t be doing that in the first place.
To accomplish this and the many other regulatory reforms we need, we also need moderates in Congress and the White House. Our government is much too divided ideologically to function, as can be seen with the appalling debt ceiling charade. That any politican would be willing to hold the full faith and credit of the United States of America hostage to his own ideology is spectaculary unpatriotic and, frankly, evil.
Such people should, quite simply, not be allowed by the voters to reach high office. The United States is the most powerful country on earth, and arguably the most wonderful national society that mankind has ever devised. It needs rule by wisdom and careful consultation, not the empty hysteria of rigid ideology.