Yes, we know. We're in a recession. The latest unemployment figures are grim, both statewide and locally â€” 12.2% for the state as a whole, 10.4% in Burbank and 11.1% in Glendale. The September numbers, released this week from the California Economic Development Department, are worse than the month prior, with the labor force shrinking by 800 in Glendale and 400 in Burbank.
The impacts are increasingly obvious. Stop by the Verdugo Jobs Center sometime. On any given weekday, hard-working people caught in this maelstrom sit at computers, revising resumes that will likely be ignored, making connections for jobs that don't yet exist, and trying their hardest not to put their fists through the screen.
This may seem a bit personal, and it is. Not long ago, I sat in front of my computer, sending out those resumes, making those connections and hustling for any work I could find. In December, at or near the height of this hemorrhaging economy, I was laid off from my job working the website of the Hollywood Reporter. (This may give some clue as to why I'm constantly talking about our online presence.)
On some level, I was fortunate: I had plenty of company, and plenty of time to rethink the traditional modes of the unemployed. The stigma of being jobless is far less than it was even five years ago. People â€” and more importantly, employers â€” understand that being laid off does not necessarily reflect on one's competence, work ethic or drive. Sometimes, it just happens.
It turned out OK for me, obviously. I worked hard to find this job, but luck and timing played a significant role. If I had not gotten this job when I did, it would have been increasingly difficult to stay in journalism â€” or in my house.
While I was unemployed, I used to marvel at the scams flowing into my e-mail inbox. Offers abounded to attend unaccredited schools, to take part in shady reverse-mortgage offers, or for quasi-legal work at $60 an hour. As the economy gets worse, the scams and shenanigans have only increased.
This week, I received a piece of mail from Citibank. More accurately, my wife received the letter. I mistakenly opened it, forgetting that there might be more than one Evans at our residence. Inside the letter, one of dozens we seem to get each month from various banks, lenders and the like was the following note:
â€œTo continue to provide our customers with access to credit, we have had to adjust our pricing. The terms of your account will be changing. These changes include an increase in the variable APR for purchases to 29.99% and will take effect Nov. 30, 2009.â€
The letter continued that we could opt out of these generous terms, keeping the old rate, but the account would not be renewed past its current expiration date.
I found this pretty amazing. We recently refinanced our house, which involved â€” among a thousand other things â€” running a credit report. Both my credit and my wife's credit is well above average. We attempt to pay the bill in full each month. Even when we don't, a balance is rarely on the card for more than two months.
This got me to thinking: If Citibank is treating us this way, how do they treat people who rely on credit for rent and food? Such people will get into a whirlpool of debt from which it will be nearly impossible to recover. But I suppose those executives need their bonuses.
Many, many banks and credit card companies are doing this sort of thing. Due to lax oversight from the federal government, it's completely legal. According to the U.S. Department of the Treasury, there is no federal law that puts a cap on interest rates. That decision is left to the states.
However, the applicability of that cap depends on where the bank is based, not the consumer. This is why many banks are headquartered in South Dakota and Delaware, where the laws are, ahem, friendly toward banks. (Citibank, N.A. is in Sioux Falls.)
Following a discussion that lasted two or three seconds, my wife and I have decided to opt out. We can afford to not use credit. But for those who have to use credit, real problems await.
Unless credit card companies come to their senses, these new policies may destroy families, and with it, communities like ours.
?DAN EVANS is the editor. He may be reached at (818) 637-3234 or by e-mail at email@example.com.