Credit Card Debt Forgiveness

I warn people about the pitfalls of using credit cards. We all know people who are drowning in credit card debt. Debt, which they will never be able to pay.

Now I am surprised to learn that to head off surging credit card defaults, banks and consumer groups are lobbying regulators to make it easier to forgive a portion of struggling consumers' credit card debt.

The proposal — and the unusual partnership by two groups typically at odds with each other — underscores the severity of the economic downturn, and the fear that credit cards could provide the next shock to the financial system.
USA Today reports that in 2008, delinquent credit card accounts hit a six-year high of 4.9%. Meanwhile, charge-offs — when banks give up on collecting debt — have been rising for about two years, hitting 5.47% in the second quarter, the latest data available, according to the Federal Reserve. Credit card and mortgage losses have dragged down banks' earnings.
Banks are proposing that they forgive up to 40% of the credit card debt owed by the most financially stressed consumers, who are close to bankruptcy. These consumers would then get five years to pay off their remaining card debt, interest-free. Banks would pilot this program with 50,000 consumers, in hopes of expanding it to tens of thousands of others.
When you consider those on Wall Street, many people are getting a helping hand to overcome the debt they have created. Will they learn from this? We all need to learn to avoid the debt and the plastic cards in the first place.
Although I understand why banks want to forgive some of the debt, I think it is wrong. This one of the primary problems in our society. Nobody takes responsibility for their actions. If you sign, you are responsible to pay the debt. Congress provides a poor example for the rest of us. When we all learn to be more responsible with the money we have and stop the unnecessary spending, our nation, with or without a new president, will get back on the right track.