[lbo-talk] definitive evidence on the housing bubble

[james at communistbanker.com]

--- Doug Henwood <dhenwood at panix.com> wrote:
A few years ago, there was a move in Congress to require credit card 
issuers to disclose how long it would take to pay off the balance at 
the minimum payment. The industry went bonkers, covered Capitol Hill 
with lobbyists, and the proposal was squelched.

JG: They have recently introduced stringent marketing rules in 
the UK, including this info. It hasn't had much effect on 
behaviour, and the industry hasn't minded much.

Problem is that it is of limited value given the complexity of 
the offers available. Issuers are struggling to differentiate 
a simple mass-market product in a competitive and profitable 
market with complicated tiered rates.

I have an offset mortgage, where my mortgage is a checking 
account with a big limit. When I worked in the department 
that managed credit risk across a multi-billion pound 
consumer portfolio, it took three of us - including two maths 
PhDs - twenty minutes to work out that the net interest benefit to 
me of taking the interest-free offer over the maximum period was 
£7, once we took into account differential interest rates and 
fees.

--James