The Two-Income Trap - Elizabeth Warren [129]
57 David S. Evans and Richard L. Schmalensee, The Economics of the Payment Card Industry (Cambridge, MA: National Economic Research Associates, 1993). Banks are “fighting back” against borrowers who pay off their loans early by charging these customers more money. Teresa Dixon Murray, “Being Good Can Be Bad in Borrowing: Banks Hit Early Payers,” Plain Dealer, May 6, 2001. Beneficial National Bank of Delaware canceled the MasterCards of 12,000 customers who paid their bills in full; they are expected to cancel another 30,000 customers soon. Other lenders, such as NationsBank and GE Rewards MasterCard, have imposed fees or canceled cards for customers who pay their bills in full. Bruce Mohl, “The Careful Debtor Loses Credit at BJ’s,” Boston Globe, September 25, 1997. A Federal Judge recently struck down a California law that required card issuers to warn cardholders how long it would take for them to pay off their debt if they only made their minimum payments. “Federal Judge Strikes Down California Card Law,” CardLine, December 27, 2002.
58 For a discussion of consumer credit during the 1920s and 1930s, see Lendol Calder, Financing the American Dream (Princeton, NJ: Princeton University Press, 1999): 156-208, 262-290. Calder reports, “The 1930s were prosperous years for consumer credit agencies. They prospered not by lending to the unemployed and destitute, but by expanding services to people who were fortunate enough to hold on to their jobs” (p. 292).
59 Between 1996 and 2001, total late fee revenues generated to bank credit card issuers increased from $1.7 billion to $7.3 billion. “Late Fee Bug,” in Cardweb.com, May 17, 2002. Available at http://www.cardweb.com/cardtrak/news/2002/may/17a.html [1/28/2003]. The average credit card late fee increased from $11.60 in February 1994 to $30.04 in November 2002. “Late Fees Slow,” in Cardweb.com, December 11, 2002. Available at http://www.cardweb.com/cardtrak/news/2002/december/11a.html [1/28/2003].
60 Revenues of the top 100 contingent collections agencies grew from $1.7 billion in 1995 to $4.2 billion in 2000. Mike Ginsberg, “State of the Collection Industry,” Powerpoint presentation of the Kaulkin Ginsberg Company, March 19, 2001. Available at http://www.kaulkin.com/pptfiles/l-the_state_of_the_collection_industry.ppt [1/28/2003]. For additional industry statistics, see Association of Credit and Collection Professionals, “Collection Facts,” in AcaInternational.org, November 15, 2002. Available at http://www.acainternational.org/intcontent.aspx?via=pn&cid=1362&sid=1 [1/28/2003].
61 In re Francis Michael Latanowich, 207 B.R. 326 (Bankr. D. Mass. 1997).
62 Professor Jay Westbrook remarked, “Sears looked the bankruptcy laws straight in the eye and defied them”—to the tune of $160 million. Barnaby J. Feder, “Bankrupt See Sears’ Strong-Arm Side: Heavy-Handed Debt Collection,” Austin American-Statesman, July 22, 1997. Sears conceded as much, agreeing to pay a $60 million criminal fine and additional restitution pegged at $600 million.
63 United States Trustee’s Response Regarding Reaffirmation Agreements Between Debtors and Sears, Roebuck & Company, In re Francis Michael Latanowich, 207 B.R. 326 (Bankr. D. Mass. 1997) (No. 95-18280-CJK).
64 We spoke with Millard Land, president and CEO of Adjuster’s Inc., a Texas-based repossession, collateral collection, and investigations agency, and a member of the Board of Directors and Grievance Chairman for Time Finance Adjusters. He told us that his firm typically charges $350-$400 to repossess a small item such as a television set, and $400-$500 to repossess something larger, such as furniture. He also said that in his experience, it is virtually unheard of to repossess personal goods, such as clothing and car batteries. These costs would far exceed the amount Sears could recoup in selling many of these goods. For example, Sears sells brand-new Walkmans for $29.99-$49.99