This program expansion makes it more important than ever that the Treasury Department restrict the types of credit card debt that can be supported by public dollars to only those credit cards with fair terms, including a timeline for working out of penalty interest rates. That is what Consumers Union and other groups asked for on Jan. 29, 2009, before this program was made five times bigger.

Treasury Secretary Geithner should limit eligibility for financing of the purchase of consumer credit card debt backed by TARP funds or other taxpayer support to only debt owed on credit cards which at least:

1. Comply now with details of the rule against unfair or deceptive acts or practices for all consumer credit card debt in the pool; and

2. Include a specific program for cardholders to earn a reduction in penalty interest rates back to a lower standard rate after no more than six months of on-time payments for all consumer credit card debt in the pool.

U.S. consumers are still waiting for action. While the estoteric-sounding TALF program hasn’t yet been the subject of much scrutiny, people are asking what we are getting as taxpayers for the money we are putting into the banks. For example, Paul Krugman said, in response to early reports about the plan to spend the second huge installment of the TARP monies: “And in return for what is likely to be a huge subsidy to stockholders, taxpayers will get, well, nothing.”
Consumers are complaining about the very credit card practices that this new program will support if the Treasury fails to restrict the credit card debt eligible for the program for debt with fair terns.

Credit card issuers are raising interest rates on money already borrowed, even for consumers who haven’t paid late. Read about that at the creditmattersblog.com, and at the Huffington Post. For more information about the credit card problems, including discussion of the TALF program, see consumer group testimony at the Senate Banking Committee by Travis Plunkett of the Consumer Federation of Americaon Feb. 12, 2009.

Our tax money should be used to support only lending of the type that doesn’t rip us off.