Richard Wald, the Fred W. Friendly Professor of Media and Society, moderates roundtable discussions with producers, directors and correspondents of duPont Award-winning broadcasts.
Frontline: The Secret History of the Credit Card(a co-production with The New York Times) Real Video
Lowell Bergman, Correspondent
David Rummel, Senior Producer
Lawrie Mifflin, Executive Director for The New York Times
It's one of the most wonderful times of the year for the banking industry's most lucrative business: credit cards. In the coming weeks, millions of Americans will reach into their wallets and use plastic to buy an estimated $100 billion in holiday gifts. But at what cost?
In "Secret History of the Credit Card" FRONTLINE® and The New York Times join forces to investigate an industry few Americans fully understand. In this one-hour report, correspondent Lowell Bergman uncovers the techniques used by the industry to earn record profits and get consumers to take on more debt.
"The almost magical convenience of plastic money is critical to our famously compulsive consumer economy," Bergman says. "With more than 641 million credit cards in circulation and accounting for an estimated $1.5 trillion of consumer spending, the U.S. economy has clearly gone plastic."
Millions of American families use their personal, general-purpose credit cards such as Visa, Mastercard, American Express and Discover to make ends meet; credit cards have been a discreet lifeline for families in financial straits.
But other consumers, like actor and author Ben Stein, use plastic purely for convenience. While it would appear that Stein -- who says he charges a small fortune every month on his credit cards -- is the ideal customer, in reality, he is what some in the industry call a "deadbeat." That's because he pays his balance in full every month.
The industry's most profitable customers, the ones being sought by creative marketing tactics, are the "revolvers:" the estimated 115 million Americans who carry monthly credit card debt.
Ed Yingling, incoming president of the American Bankers Association, tells FRONTLINE that revolvers are "the sweet spot" of the banking industry. This "sweet spot" continues to grow as the average credit card debt among American households has more than doubled over the past decade. Today, the average family owes roughly $8,000 on their credit cards. This debt has helped generate record profits for the credit card industry -- last year, more than $30 billion before taxes.
Some experts say the profitability of credit cards really began twenty-five years ago, when the banking industry successfully eliminated a critical restriction: the limit on the interest rate a lender can charge a borrower. Deregulation, coupled with a revolution in technology that enables the almost real-time tracking of personal financial information and the emergence of nationwide banking, has facilitated the widening availability of credit cards across the economic spectrum. But for some, the cost of credit is often far greater than it appears.
According to Harvard Law Professor Elizabeth Warren, the credit card companies are misleading consumers and making up their own rules. "These guys have figured out the best way to compete is to put a smiley face in your commercials, a low introductory rate, and hire a team of MBAs to lay traps in the fine print," Warren tells FRONTLINE.
Warren and other critics say that a growing share of the industry's revenues come from what they call deceptive tactics, such as "default" terms spelled out in the fine print of cardholder agreements -- the terms and conditions of which can be changed at any time for any reason with 15 days' notice.
Penalty fees and rates are sometimes triggered by just a single lapse -- a payment that arrives a couple of days or even hours late, a charge that exceeds the credit line by a few dollars, or a loan from another creditor which renders the cardholder "overextended" as defined by the nation's three all-powerful credit bureaus. This flurry of unexpected fees and rate hikes come just when consumers can least afford them.
"[Banks are] raising interest rates, adding new fees, making the due date for your payment a holiday or a Sunday on the hopes that maybe you'll trip up and get a payment in late," says Robert McKinley, founder and chairman of Cardweb.com and Ram Research, a payment card research firm. "It's become a very anti-consumer marketplace."
Banking Association spokesman Yingling defends industry practices. Because the credit card business is basically unsecured lending, he says, the risks associated with the business must be offset.
But that's of little consolation to consumers who may be in trouble. According to the Better Business Bureau, credit card and banking companies are the subject of a record numbers of complaints. "It's not an accident that the banking and credit card business generates more complaints nationally, across the country, than any other industry…Out of one thousand industries that we track, they are number one," says Pat Wallace, head of the San Francisco Bay Area Better Business Bureau. "There are irritated, unhappy, dissatisfied customers in this industry."
As Professor Warren sees it, the industry is operating without fear of penalty. "There's no regulator, and there's no customer who can bring this industry to heel," Warren says.
This is part 6 of John Pilgers talk entitled "Freedom Next Time". He says something some of us know but that many others are not yet aware of and it is important to see someone with authority openly say it and say it so very clearly.
"The Challenge for the rest of us is to lift this subjugated knowlege from out of the underground and take it to ordinary people. We need to make haste. Liberal democracy is moving towards a form of corporate dictatorship. This is an historic shift and the media must not be allowed to be its facade, but itself made into a popular burning issue and subjected to direct action"
Nick Davies is the bestselling author of Flat Earth News, a book on falsehood and distortion in the media. Nick is also a former Journalist of the Year.
In Flat EarthNews, award-winning journalist Nick Davies takes the lid off newspapers and broadcasters, exposing the mechanics of falsehood, distortion and propaganda; naming names and telling the stories behind stories. This website is intended to be a focal point for exposing past, current and future media abuse.
Journalists, and anyone else with direct knowledge of media malpractice, are invited to blog about examples of media falsehood and distortion; PR tactics and propaganda; and the use of illegal news-gathering techniques. All visitors are invited to make comments on these blog posts.
Author Jeremy Scahill speaks in Chicago at "Socialism 2007: Socialism for the 21st Century" In his landmark book "Blackwater: The Rise of the World's Most Powerful Mercenary Army" Scahill details the Bush administration's accelerated program to privatize the US military through the use of a 'shadow army' of mercenaries in Iraq and else where, most notably New Orleans after the devastation of hurricane Katrina. Filmed by Paul Hubbard June 16, 2007
Journalist Jeremy Scahill discussion about American military power and economic imperialism in the coming years, related to Obama policies. He is is a correspondent for Democracy Now, and is a frequent contributor to The Nation.
Scahill documented the use of private military contractors in his award-winning book "Blackwater: The Rise of the World's Most Powerful Mercenary Army,".
Eduardo Galeano: "El mundo se divide en indignos e indignados"
The Crime of Ecocide
http://www.pollyhiggins.com/
"... move away from property laws to trusteeship laws, so rather than I own, to I owe. I owe a duty of care to this planet."
12-year old Victoria Grant explains why Canada (her homeland) and most of the world, is in debt.
"How the Media Frames Political Issues" by Scott London
In The Emergence of American Political Issues (1977) McCombs and Shaw state that the most important effect of the mass media is "its ability to mentally order and organize our world for us. In short, the mass media may not be successful in telling us what to think, but they are stunningly successful in telling us what to think about."[13] The presidential observer Theodore White corroborates this conclusion in The Making of a President (1972):
The power of the press in America is a primordial one. It sets the agenda of public discussion; and this sweeping political power is unrestrained by any law. It determines what people will talk and think about - an authority that in other nations is reserved for tyrants, priests, parties and mandarins.[14]
McCombs and Shaw also note that the media's tendency to structure voters' perceptions of political reality in effect constitutes a bias: "to a considerable degree the art of politics in a democracy is the art of determining which issue dimensions are of major interest to the public or can be made salient in order to win public support."[15] http://www.scottlondon.com/reports/frames.html
I am just an anonymous citizen who firmly believes that we are the ones we are always waiting for. No saviors, heroes, leaders, gurus, or superior or inferior, we are all equals, and we need to think and behave as if it matters.
duPont Award-winners Engage in Roundtable Discussions
