Friday, January 26, 2007

Senate Banking & Harvard Law

I was watching C-SPAN this evening and I watched part of the Senate Committee on Banking, Housing, and Urban Affairs hearing "Examining the Billing, Marketing, and Disclosure Pratices of the Credit Card Industry, and Their Impact on Consumers." (my wife agrees - I'm a nerd)

I would like to disclose that I work for an Auto Finance company that is a division (and/or subsidiary) of a major credit card issuing company; though, not in an executive or managerial position.

I watched Senator Dodd struggle to understand how interest is calculated (why is he the chair of this comittee?). But, I felt that it was important to comment on a statement made by Elizabeth Warren. Dr. Warren is the Leo Gottleib Proffessor of Law at Harvard University Law School.
Senator Richard Shelby commented that she was "...clear, concise, un-ambiguous and forceful in [her] testimony". Then he asked, "Why... in your judgement, would a credit card issuer send me - for example - 3 succesive credit cards if I had a balance on one that I may have been struggling to pay?" Her answer was, "There can be no reason except to increase the revenue to the credit companies. That's all this is about, plain and simple."

I'm going to state my comments in capital letters. I think it's important that you understand that I am stating this very strongly. I am speaking very slowly and very clearly.

I am baffled at the people (especially Harvard Lawyers) that do not understand the purpose behind a corporation. I do not understand how critical comments can be made about a profit earning organization who's primary goal is to increase profit.
If Dr. Warren were stating that these practices were unfair or deceptive, I would understand (though, I would still expect for her to explain that argument). However, Dr. Warren criticized these companies because they had no reason to facilitate this practice except for the purpose of increasing revenue. I would wonder what other reasons a company has for taking any action. It seems to me that the generation of revenue is the primary reason for any practice - by far.

You can watch the hearing here, but it's long. (This blog references the comments at 2:18:50). I apologize that my concluding skills are inadequate.

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