While I appreciate much of what Suzie Orman advocates, her style for my taste in finacial matters is not altogether pleasing. Not that those in this profession have to boring, it's just that I'm not really into high drama-over-the-top-financial advisers whose business is show business, even if they're making solid points. Jim Cramer is definitely not among my favorites, not only for his style but for his lack of substance.
Orman makes a great point here about ethical Americans, taxpayers who bailed out banks--by the way, who have paid their credit cards on time and still banks have increased their interest rate to 30%, revoked their credit cards, reduced their credit limit, and increased their minimum monthly payments from 2% to 5%. This seems highly unethical when ethical people are responding ethically to the uphold their end of the deal. They stick it to the banks by themselves becoming unethical in refusing to pay their credit card bills.
Orman is tacitly advocating a "debotors' revolt," a refusal by policy credit card holders to pay their credit card. But does unethical behavior still breed unethical behavior? When people respond unethically to an unethical problem does the situation get worse or better? After all, these people are under contract and the banks are not breaking the law. But what is a person suppose to do?
It appears that some people are having some immediate success in revolting against the banks. Their terms are being re-negotiated. But what does that say about our society? Does it say that we can only fight bad ethics by being unethical ourselves? What are we really advocating here? Is there a better way?
12 comments:
I doubt Ms. Orman has any credit card debt, so she has nothing to lose here. For her to tell people to not pay their bills is ridiculous. I know how hard it is to establish a good credit rating and to destroy it at the behest of a millionaire 'celebrity' so-called financial counselor is crazy. I do agree that something needs to be done, but not paying our bills is not going to do anything but give us a bad credit rating!! There has to be a better way. Interesting post, Judith!
Marion - I'm afraid that's what the banks are banking on with their unethical practices, our fear of getting a bad credit score. But what is a credit score in a revolt of millions? Dare I say, one hundred million? Even if a few million people do such, banks would lose big. I guess this is the point. But my greater question is an ethical one: Can we fight bad ethics by being unethical ourselves?
I think that as consumers we must honor our debts. It is our contractual and ethical obligation. As they say, two wrongs don't make a right. I agree with Marion. There must be a better way.
Kelly - I agree with this statement wholeheartedly: "I think that as consumers we must honor our debts." But I also strongly believe in grace. There used to be a time in Old Testament scripture, Jubilee year, that debts were cancelled after every seventh year. Our financial system used to be that way until debt became advantegeous and we began selling debt to others and increasing our very own through greater deficit spending.
I'm for personal responsibility and accountability but I'm also a strong proponent of grace. We all need a fresh start at some point or another; we all need to begin anew. I think our current debt selling and creating system feeds off of negativity and in return this is what's given back--more debt where the rich get richer and the poor get poorer and we all lose out spiritually and in building a stronger economic system that is more feasible for all.
We bailed out the banks but they won't bail us out. There is something wrong with this picture.
Reform of financial institutions NOW!
I didn't link in to the suzie orman video so I can't comment on that. The only thing I know is that what the banks are doing - after being bailed out and altho they are acting within the limits of the law - seems like corporate rape. Debtors who have been meeting their bills on time and continue to do so are being penalized for doing the right thing; those that refuse and revolt, these companies are working with them to lower their rates. There is something hugely wrong with this. It is demoralizing and leaves the debtor at the mercy of a corporation that can do with him/her what it wants. Debtors have no control and millions will not see freedom for decades to come. Granted we accumulated those debts but to the victors the spoils? It angers me at the injustice of how this is being handled.
Rebecca - I completely agree that this is so very demoralizing for those who are actually doing the right thing and also so very unjust. Banks are skating on pretty thin ice, I think. A debtors' revolt is probably exactly what they will get if they don't make some changes. The problem is that banks and insurance companies seem incapable of making changes themselves. Lenient laws have to be repealed and others enforced. I read an article yesterday in the Washington Post that banking lobbyists are balking that that reform will be in the hand of individual states under a reform measure and they fear that the states will be unduly harsh. It seems that they would much prefer to hang out under the ambiguity and maze of Washington. Big government seems to actually work for bankers. They have long been bed fellows, though not always for ill. These are also probably those who taut states rights. I guess it only matters when it suits them.
I can't speak for other kinds of debtors. I know that my husband tries very hard not to carry debt; which went out the window when we had kids (and special needs).
But because he tries to pay off the card every month, he's found that when he can't and is looking for a better deal, the banks are eager to work with him instead of losing his business all together.
I watched a show not long ago about a priest getting banks, who were foreclosing on minorities, to come to the table to renegotiate the loans. It was a win-win for everyone.
So I wonder if everybody just calling up the credit card companies and renegotiating the terms of their contract in good faith is a more ethical solution?
Again, this may be unrealistic. We might be able to do this because of our long good credit standing???
Corrie - I'm happy about the success of your family. I don't think, however, that is the case for many families. I have read countless stories of the exact opposite happening to families with excellent credit who pay on time. I am also sure that not all banks are the same and that there are many ethical ones among these. My greatest concern is with Wall Street banks. Oh, yeah, the Catholic Church needs more real estate as the largest real estate holders in the world. Hmm? Do they pay taxes? I'm not feeling a lot of religious institutions who have kept silent on so many ethical issues of our day. They want to harp on abortion and not health care. Some 46,000 million Americans die every year for the lack of health care insurance. Sorry. I'm not feeling very warm and fuzzy today. You will say a prayer for me, won't you? :-)
I'm sorry if I wasn't clear. The priest talked banks into coming to the table with these families to find ways for these hard working families to keep their homes...especially the ones who had been good credit up to the point they lost jobs. I think this process stopped about 200 homes from being foreclosed.
I was inspired by the story because it reminded me of how just one person can make a difference. He made a difference by making a plea for his community (whether they were his church members or not).
Ah, that's beautiful, Corrie. Thanks for the clarification. I misunderstood. Also, perhaps there are other religious organizations that are also doing the same. This would be great. Just because I haven't heard of it doesn't meant that it's not being done. Although, I sure wish it would make the national news online or in newspapers and magazines.
It was on TV. I want to say it was in Arizona or California. I hardly ever get time to watch TV, so I honestly don't remember where I saw it or why. :-)
Thanks, Corrie. I appreciate that you both saw and shared it.
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