With the latest numbers from the Federal Reserve indicating that Americans are facing $900 billion in credit card debt, the proposed bailout is probably a case of banks simply attempting to cut their losses. Seeing the writing on the wall as consumers deal with record unemployment rates, skyrocketing home foreclosures, inflated prices for goods and their 401(k)s tanking, these financial giants are taking action in the form of a proposed temporary pilot program in which lenders would forgive as much as 40% of the amount of credit card debt consumers owe.

The proposal is being spearheaded by the Consumer Federation of America and the Financial Services Roundtable, and has the support of the most of the major players in the credit card banking circus (I mean circuit) including Discover Financial Services, American Express, Bank of America,  JPMorgan Chase & Company, Citigroup Inc., and Capital One Financial. The catalyst for this rather brash action? Credit card delinquencies are skyrocketing, and issuers’ charge-offs — balances written off as bad debt — are up 48% compared with last year, according to Moody’s Investors Service.

The credit card debt-forgiveness plan could (initially) help an estimated 50,000 people who are in serious debt, potentially facing bankruptcy; possibly more if the pilot program is deemed successful. How much debt would be forgiven would rise according to the severity of the borrower’s financial strife, ranging from 10 percent up to a maximum of 40 percent, contingent on evaluation of the individual’s personal financial situation. Individuals qualified to receive the maximum forgiveness level would be those nearing a personal bankruptcy filing. Additionally, qualified borrowers would have to enroll in a credit card debt counseling program. Debtors would also obtain a tax benefit, deferring income tax on the forgiven debt until they’d paid off the remainder of their balances.

It appears that the credit card companies have decided that getting something out of these debtors is better than getting nothing if they stop paying or file for bankruptcy.

How can I sign up? Wait; I probably don’t qualify. How “unfair” that I can’t take advantage of any of these bailout programs since I was able to sell my home last year and make a (much smaller) profit and still pay off my credit card debt each month– so far, with only part-time employment .

Many of us can probably relate with a quote from a recent article in msn money by Liz Pulliam Weston:

Bailouts are going to reckless Wall Street bankers, to homeowners over their heads and now maybe even to Americans hooked on credit cards. Where’s the reward in doing the right thing?

I guess I’ll just have to wait until the “Main Street Bailout” for those of us that have saved responsibly for years, and just lost half of it in the stock market, comes about; unfortunately I suspect I’ll qualify for that one…. that will never happen.

Is anyone else out there starting to get a little peeved?

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