Edwards focuses on middle-class money worries
He vows to crack down on predatory lenders

Thursday, November 6, 2003

By DANIEL BARRICK


Sen. John Edwards fine-tuned his economic plan yesterday by focusing on the little things. Rather than dwelling on federal deficits and billion-dollar budgets, Edwards addressed the details of everyday financial life: credit card debt, student loans and personal savings accounts.

"What too many in politics seem to forget is that the middle class is the backbone of our society and it is the engine of economic growth," Edwards told a crowd of students in the library of New Hampshire Technical Institute. "As president, I will renew this middle-class promise so that all of our families can build the future they deserve."

Edwards vowed to crack down on predatory lenders and credit card companies, which he said preyed on America's middle class through excessive interest rates and hidden fees. The trend toward more borrowing by middle- and lower-income families has been increasing in recent years, Edwards said.

"Families are under attack, a sneak attack, from irresponsible lenders who offer deceptive terms, charge unfair fees and trap the unwary or unlucky," he said. "We need a president willing to take them on."

Edwards specified several problems that prevented people from saving. Home mortgage costs have increased at a faster rate than income levels, while home foreclosures have more than tripled in the past 25 years, Edwards said. He also attacked lenders who extend credit at higher interest rates to borrowers who are more likely to default, accusing them of using deceptive terms and excessive interest rates. Such "predatory lending" costs Americans more than $9 billion a year, Edwards said.

These trends have caused credit card debt to increase from four percent of income to 12 percent over the past 20 years, while personal bankruptcies reached an all-time high of 1.6 million last year.

Edwards proposed a range of solutions, including tightening disclosure requirements for lenders; requiring credit card companies to give borrowers a 14-day grace period before late fees kick in; and restricting the practice of pre-approving customers at low interest rates that increase before the contract is final.

He also reiterated proposals he has mentioned before, such as a $5,000 tax credit for first-time homebuyers and matching savings accounts of up to $1,000 for workers earning less than $50,000 a year.

While Edwards accused the Bush administration of worsening this trend, he said the middle class's slide from prosperity had been a problem for decades.

"In a generation, families have gone from saving for the future to borrowing to get through the present," Edwards said. "If we help families save, as I'm proposing today, we can unleash a new era of possibilities, with an economy stronger because we're saving and investing more, and with children prospering because they have a strong foundation on which to build."

His plan would save middle class families $100 billion over the next decade, Edwards said.(Daniel Barrick can be reached at 224-5301, ext. 322, or by e-mail at dbarrick@cmonitor.com.)


Monitor staff