The lead story in this morning's Rapid City Journal (complementary copy greeting me at my motel room door here in Sturgis—thank you, Holiday Inn Express!—as I wake to judge State Interp) finds Governor Mike Rounds and Senator John Thune, good Republicans both, standing up to big government to protect South Dakota jobs.
At least that's how they would like the story to read. Unfortunately, the rules Rounds and Thune are opposing are new regulations, proposed by the Bush Administration (remember them?) in May, to provide some relief for folks with credit card debt. Included in these regs is a change that, according to Jeremy Fugleberg's report, would "bar credit card providers from charging fees up front and putting them on the first month's bill for the credit card. Instead, a provider would have to spread the charges out over 12 months."
Supposedly this one rule change could put South Dakota credit card companies like Premier Bankcard out of business.
Premier Bankcard—you know, where T. Denny Sanford made all of his money, handing out the plastic version of subprime mortgages to folks who maybe shouldn't have credit cards in the first place.
Ah, now things make sense:
The fee rule could upend the business model for South Dakota-based Premier Bankcard and other businesses involved in providing cards to high-risk borrowers.
"We're appealing to them to moderate this so we don't end up putting an important industry out of business here in South Dakota," Sen. John Thune, R-S.D., said.
If approved, the rule could be a "deal breaker" for Premier and similar banks, Roger Novotny, head of the state Banking Division, said.
...About a third of sub-prime borrowers default on their card account within the first few months, and the rule would bar credit card providers from charging them the fees that make that risky lending worthwhile.
"So there's a tremendous potential for loss there," Thune said [Jeremy Fugleberg, "Fed Rules Could Cost South Dakota Thousands of Jobs," Rapid City Journal, 2008.12.06].
Sanford, Janklow, Rounds, Thune, et al.—I guess you've got to give 'em credit for building an "important" industry on the idea that "you've got to give 'em credit"... and sock 'em with fees and rates that keep 'em in debt.
In other words, the GOP plutocracy has built South Dakota's "prosperity" on a fundamentally irresponsible, untenable industry that preys on our neighbors (also known to avid readers of the Bible as usury).
Premier Bankcard and the other lenders of last resort in our state have smart people working for them. One decent rule from Washington won't throw them out of business... although if it does, maybe they shouldn't have been in that business in the first place.