I found a few interesting articles in the financial press today, all of which demonstrate some aspect of the Law of Unintended Consequences. I’ll share then below with very little commentary.
First, from Chuck Jaffe, at MarketWatch:
BOSTON (MarketWatch) -- Things were supposed to get better for credit card customers, beginning Thursday. That's when the latest law to protect the public from credit-issuer practices that are everything from annoying to unethical takes effect.
Yet, empirically speaking, it's clear that the unintended consequences of the new law are that credit issuers are unleashing trouble on unsuspecting consumers, and that the pace of change is likely to pick up.
And a firsthand report about the same:
This weekend I received a document in the mail … entitled “Notice of Change in Terms, Right to Opt Out and Information Update”. This document informed me that as of October 1st, [the credit card company is] increasing the interest rates charged for purchases to usurious rates–specifically to prime rate plus 21.99%. Using July 1, 2009’s figures, the rates to me will be 25.24% — an increase of nearly 10%.
I have no doubt that this notice was sent in response to the Credit Cardholders’ Bill of Rights Act recently signed into law, and to say that I am appalled and disappointed hardly begins to describe it.
Next, regarding the “highly successful” Cash for Clunkers program, from Jennifer Waters, at MarketWatch:
CHICAGO (MarketWatch) -- You have just a few days left to trade in your clunker for up to $4,500 off the cost of a new, more fuel-efficient car.
But because of some potholes in the reimbursement process, you may find yourself facing off against the car dealer, consumer advocates say.
Some auto dealers are pressing consumers to sign agreements requiring them to pay back to the dealer the rebate of up to $4,500 -- or return the new car -- if the government doesn't approve the customer's clunker exchange.
But some say consumers shouldn't be on the hook to come up with the cash.
"You go in, you trade in your car and you think you're getting in on the cash-for-clunkers deal. But then the dealer tells you, 'Oops, it didn't go through. We need the money or the car back,'" said Rosemary Shahan, president of Citizens for Auto Reliability and Safety, or CARS, a California-based advocacy group.
"To be fair to the dealers, it's a new program, it's complicated. There are probably dealers who have made a lot of honest mistakes," she said. "The question is: Who should pay for that? We're concerned consumers are being pressured to come up with money that they really don't have."
Meanwhile, tired of doling out hundreds of thousands of dollars worth of rebates to consumers without yet seeing a dime, in some cases, from the government, some dealers have stopped participating in the clunker program, according to news reports.
Since the Cash for Clunkers program has worked out so well, a new similar program is being implemented, cash for just about anything you want to buy. From Matthew Boyle, at Business Week via Yahoo:
A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool (NYSE:WHR - News) and Electrolux out of the worst down cycle in the sector's history.
Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)
"These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy," Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.
More …
We’ll see how this new one works out. It would be kind of entertaining to watch all of this if it were a movie or something. However, when I consider the evil they are doing, and the destruction it will bring to my future and that of my children, I just get angry.
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