Mortgage and consumer debt totals; the numbers boggle the brain

Just so you know, here are some figures from the Feb., 2007 Statistical Supplement to the Federal Reserve Bulletin:

1. Total U.S. Mortgage Debt Outstanding (Table 1.54), in millions of dollars

2002-------8,367,310
2003-------9,374,889
2004------10,680,490
2005------12,148,740
2006**----13,033,520
**--Third Quarter

Now remember, those figures are in millions. So the 2006 figure is 13.033 trillion dollars. And the 2006 figure is a full 55.77% higher than the 2002 figure.

2. Total Outstanding Consumer Credit (Table 1.55)

2003-----2,087,784,000,000
2004-----2,202,425,000,000
2005-----2,295,558,000,000
2006**---2,380,924,000,000
**End of October

That's an increase of almost $300 billion from 2003 to Oct. of 2006. And the total in Oct. of 2006, $2.382 trillion, works out to $7,936 for every single one of the U.S.'s estimated 300,000,000 citizens.

Credit card companies squirming before Congress

Another tangible benefit of Congress being in Democratic hands: the Senate Homeland Security and Governmental Affairs' investigative subcommittee spent part of today making the heads of three huge credit card companies squirm with stories and questions about how they operate.

For some reason, they "operate" in a way that makes most consumers squirm and poor. It's nice to see the tables turned if only for a little, public, while. From an AP story in the Raleigh News & Observer:

Executives of three major banks defended their credit card practices as responsible and responsive to consumers' needs in testimony at the hearing of the Senate Homeland Security and Governmental Affairs' investigative subcommittee. Those from Citigroup Inc. and Chase Bank USA said their companies were eliminating some practices - including the one that hit Wesley Wannemacher of Lima, Ohio, with over-limit fees on his Chase card account 47 times although he went over his credit limit only three times.

The interest charges and fees on Wannemacher's account more than tripled his debt despite his having made payments averaging $1,000 a year over six years, noted Sen. Carl Levin, D-Mich., the subcommittee's chairman.
...
Wannemacher used a new Chase card in 2001 and 2002 to pay for expenses mostly related to his wedding. He had $3,200 in purchases, interest charges of $4,900, 47 over-limit charges totaling $1,500, late fees of $1,100, for total charges of $10,700 as of February. He paid $6,300, leaving a $4,400 balance - which Chase agreed to waive after he contacted the subcommittee staff.

"Debt seems to invoke a feeling of hopelessness unlike any other problem I've encountered," Wannemacher testified at the hearing. "When a debtor calls you on the phone and you make a minimum payment, you know that you've made no real progress and that in a month, they will be calling again."

Sen. Norm Coleman of Minnesota, the panel's senior Republican, said high interest rates on credit cards, "hefty fees and crippling penalties impede more and more hard-working families from pursuing their American dream."

The problem is worsened by the "impenetrable" language of credit card disclosures provided to consumers, he said.

While the credit card practices in question are legal, Levin is threatening possible legislation to outlaw them as a spur to the banking industry for voluntary changes.

Senate Banking Committee Chairman Christopher Dodd and other Democratic senators challenged credit card executives at a hearing in January over rising late fees and other penalties and marketing practices they portrayed as predatory. Dodd, D-Conn., said he was putting the industry on notice that if it doesn't improve practices on its own, legislation may be warranted.
...
Citigroup, the nation's largest financial institution, announced last week that it was eliminating the practice of so-called universal default - raising interest rates for card customers because of their failure to pay other creditors on time. In addition, Citigroup said it would eliminate some types of interest rate increases that have been criticized.

Isn't it odd how the Republicans, loudly proclaiming their "family values," managed to ignore this credit card insanity, and the Democrats, reviled by conservatives for their lack of family values, are actually trying to make it a little bit easier for families to survive economically?

Guess it's the difference between viewing "family values" as an abstract philosophical and political issue related to maintaining the place of nuclear family units in the social structure of the world, and viewing "family values" as those real world values that help real world families survive in the real world, regardless of their nuclearity (if it ain't a word, it should be).
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You are what you buy?

Check out this summary of a 1-28-07 World Economic Forum discussion panel titled "Brands: Today's Gods?" (emphasis added).

Reno Sami, Manager, School Uniform Project, Plusminus Basel, Switzerland, observed that consumers often spend too much money on branded goods: according to surveys, he said, "70% of consumers said they would become indebted in order to follow fashion". The big brands, he stated, make false promises and behave irresponsibly.

Sir Martin Sorrell, Group Chief Executive, WPP, United Kingdom, disagreed, arguing that the choice of a brand is up to consumers and is an expression not only of what they like, but of who they are. "It isn’t just copying fashion," he said, "it is an emotional experience to choose a brand. I have no problem with that." However, Sorrell agreed that corporations should be careful not to seek to indebt consumers in order to increase sales. "The responsible companies should not do that," he said. "And the trend is for companies to take corporate social responsibility increasingly seriously. You can’t find a CEO today who would say that the environment isn’t his concern or that corruption isn’t important."

On a deeper level, Sorrell commented that with the evolution of information technologies, consumers are enjoying rapidly growing power regarding the choices they make. "There are blogs, citizen newspapers and even homemade films," he explained. "They go over the Internet and consumers react to them – immediately." It would be a great mistake to underestimate the critical intelligence of consumers, he observed. Their choices, based on such information, will vastly enhance the efficiency and the effectiveness of the free market – "one of the most powerful mechanisms created". Corporations, he remarked, are taking notice. "This is a really great thing," he concluded.

Sami argued that consumers need to be educated about their credit habits, which the public sector has rarely proven capable of doing. He said that some regulation might be required to protect certain consumers from false-advertising claims. This is particularly true for children and adolescents, who are less informed and more vulnerable to peer pressure.

Sorrell again disagreed, stating that consumers have to exercise their choice, which is their personal and social responsibility. "It should begin in the home," he said. Kathleen Ix, Student at the International School of Geneva, stated that as a student she does not feel compelled to buy brands. "My parents brought me up to think about how I spend money," she said, "so I am very conscious about what I think is a good purchase." Her experience delighted Sorrell, who said that Ix’s family is a great example of informed consumers exercising their power.

The debate concluded with a description by Sami of the experimental programme he ran to get students to accept school uniforms. The students considered uniforms created by four young designers. Once they picked the prototype, they helped to design the final choice. "For the programme to work," Sami explained, "the students have to engage in a real debate on what a brand is, but also on their identity and what it means to them."

Don't know about you, but I don't give a Reebok's damn about brands. Wouldn't let that affect my personal ego-buying decision for all the MP3s in the universe.