Egregious Conduct By Credit Card Issuers Consistent With That Of Predatory Mortgage Servicers

(revised 3-10-07)

Top officials from the major credit card issuers testified on Wednesday which highlighted some of the egregious practices their companies engaged in that soaked consumers out of millions of dollars. Click here to see yesterday's NBC Nightly News video covering the hearing, report by Lisa Myers.

Click here to view C-Span's 3-7-07 coverage of the Senate hearings (Be sure you have the most recent version of the Real Player).

While not a home equity theft issue, per se, the egregiousness of the conduct decribed in the hearings is not inconsistent with the conduct of predatory mortgage servicers when collecting bogus fees from financially strapped homeowners, which is an issue I have reported on in the past and is a home equity theft isssue.

The obvious approach by these large financial companies appears to be to try and get away with as much as possible for as long as possible, and when Congress finally gets around to hauling them into a hearing to answer questions, they simply say they're sorry and promise not to do it again.

Now that Congress is controlled by, arguably, the more "consumer friendly" of the two major parties, I suspect that at some point they will address the problems of predatory mortgage servicing.

For previous posts on predatory mortgage servicing, and links to relevant background information, see:

• Private Property Rights Deferred: Has Predatory Mortgage Servicing Destroyed the American Dream
• Predatory Mortgage Servicing Destroying The American Dream?
• Predatory Mortgage Servicing Practices
• Predatory Mortgage Servicing

For Attorneys and Law Students Only

A point that was stressed by one of the witnesses in the hearing was that the credit card issuers weren't doing anything illegal when they were soaking the consumer with high fees, increased interest rates, universal default provisions, etc. My question simply is:

• Why aren't the credit card contracts that purportedly allow the issuers to rip off the consumers considered unconscionable "contracts of adhesion?"

My understanding is that such a claim is an equitable claim, which may not be subject to the arbitration provisions that the major financial corporations are notorious for sticking into all their credit card contracts. Accordingly, such a claim could be litigated in a court of law as a class action lawsuit, rather than as an individual case in front of an arbitrator (If I'm wrong, somebody please correct me).

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