I’ve been thinking. . . no smart aleck remarks ; ), about the consumer credit/loan crisis, and I wondered how just many loans were defaulted on because of families in crisis, due to loss of jobs, illness, or some other kind of legitimate hardship?
When a family runs into hardships, there is the family leave act. It doesn’t pay the bills while the person takes a leave from work, and maybe it should at least help out financially a little, but that’s another subject. But what about those loans, on the house, on the car, the credit cards? None of the bills stop when a family encounters hardship, making the situation much tougher.
When the government or big business can’t pay their bills, they simply write some kind of legal gobbledygook that buys them time, or they pull some kind of fancy financial shell game rearranging finances to ease their financial strain. Now why is it that they can do stuff like this and we can’t? Why are we excluded from these kinds of practices? Isn’t it time we demanded some kind of protective outs, too?
I’m talking consumer lending reform – protective clauses for credit lines and large purchase items, like homes and cars. Clauses that would pause things financially, with no hits to the consumer’s credit score, no increase in interest, during true cases of hardship . Laws that would put the human factor back into the financial world and level the financial playing field a bit. And while we’re at it, what about the tax burdens, on all levels, (country, state and county) of those encountering long-term financial hardship? Shouldn’t those be halted and/or possibly forgiven for the duration, too?
To accomplish this, I think these changes in structure of consumer lending should be drawn up by small town lawyers, CPA’s, and everyday folk, to keep it plain, straight forward and simple. I’m talking no loopholes for those well off folks who have resources, no fancy wording that would allow it to be twisted and exploited by big corporations, or government. Protective financial changes just for the masses that would allow for consumers encountering hardship to hit the pause button on their finances for incremental lengths of time depending on their situation. (Of course those drawing up these financial changes would have to be those with a proven record of integrity, so as not to be bought off in the process. Maybe they could agree to be kept under surveillance during the process?)
And while we’re at it, maybe there’s some way to bake in wording that prevents the big guys from saying, well, if they get this, then we’ll change that. No messing with other consumer laws, like those surrounding bankruptcy in retaliation, or to tip the scales back in their favor. The advantage has been in their court, far too long. It’s time to help the little guy for a change.
To help the maximum number of cases, make these mandated financial pauses accessible for differing lengths, a short term pause, say six months, a medium term pause say a year, and a long term pause of up to two years. Also bake in a clause that would allow for refinancing down to a lower rate in cases where extended trouble dogs a family. And, while we’re at it, don’t limit it to only once during the life of a loan, but allow for up to say three times. The banks would get their money, just a little slower in hardship cases. Financial institutions play the stock market, with our money I might add, and that can be risky, often changing the rate at which it pays out, how much, and even if it pays at all. How would this be any different?
Isn’t it about time “We the people” enjoyed the same rights as the big guys? And, after all, how many of our current economic woes are their fault because of risky business and investing practices? Isn’t it time they paid the price for their indiscretions instead of the little guy taking the fall for them? I think lending reform and consumer protection clauses, like the ones I’ve suggested here, would be at least a step in the right direction to make amends.