Tuesday, December 27, 2005

The GOP Strikes Again

The Republicans obviously never tire of protecting their friends at the expense of the rest of us. Check out this article by Daniel Auld:

When Ohio Congressman John Boehner recently told a gathering of student loan bankers that he had some "tricks up my sleeve to protect you," he wasn't talking about new tricks. He was talking about the oldest trick in the book: "Protecting" business people from competition and innovation. Stopping consumers from getting lower rates and better terms for their student loans.

The student loan business is now one of the most profitable in America, says Fortune Magazine. And it did not get that way because student loan bankers are smarter, better or less expensive than bankers in other industries.

It is more profitable because they have more protection from competition. And now Boehner, head of the House Committee that oversees student loan legislation, is promising them even more protection from the one force that drives down prices, improves service, and stimulates innovation: Competition, of course. Which in the student loan business in almost non-existent. Thank you, Congressman Boehner.

That is the way it was until earlier this year, when in January, the Department of Education ruled that borrowers looking to reconsolidate their student loans could sidestep the longstanding anti-competitive rule against doing so.

It was cumbersome, but effective. Borrowers had to use a two-step process of reconsolidating into the federal government's Direct Loan Program, then reconsolidating again with a private lender offering better rates. Before then, borrowers were locked in to their current lender no matter what other lenders offered them a better deal.

In May, the Department of Education set aside another longstanding anti-consumer policy by ruling that borrowers who are still in school could convert their variable rate student loans into fixed-rate consolidation loans before rates increased in July. That way they could take advantage of historically low interest rates, much as millions of other borrowers do with their home loans. While borrowers celebrated, consumer bankers plotted. Enter Boehner. Buried deep in legislation to raise prices on student loans are provisions that will largely outlaw the reforms that introduced so much competition into student loans earlier this year.

If passed, student loans would once again be the only thing sold in America that cannot be freely refinanced.

Columnist Dick Morris calls the anti-refinancing scheme an "obnoxious .. ripoff." Terry Savage, the financial columnist of TheStreet.com, says there is "no way" borrowers should support this plan." The New York Times calls it "Robbing Joe College to Pay Sallie Mae," the country's largest student loan provider. The Times Union of New York, calls plans to outlaw refinancing a "student loan shame.'

These guys seemingly continue to solidify their status as the true enemies to freedom on a daily basis. The sheer arrogance of the Republican Party may actually force me to vote for a solid slate Dems next time around just to ensure that these jokers lose. I have had it. They think that their base has no where else to turn - well, I say we all make a big turn. 2006 presents a timely opportunity to send a message to D.C. and the GOP-establishment - a message that they will hopefully take to heart before '08. Mark my words, nothing guarantees a President Hillary more than 3 more years of the big-Republican-government status quo.