tocacco plant Native American Tobaccoo flower, leaves, and buds

tocacco Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.

tocacco nicotina Nicotiana tabacum

tocacco Nicotiana rustica leaves. Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%

tocacco cigar A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.

tocacco Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cheap cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.

tocacco

Banking industry should take cue from Big Tobacco

The banking industry could learn a little something from the cigarette business, and that is that there’s a time to shut up and do the right thing. Just put the warning labels on the credit card statements, already, and stop grousing about the cost and trouble of trying to protect consumers from their own worst instincts.

Now, credit isn’t actually deadly, but it can do a lot of damage to some of the most vulnerable, especially those who don’t understand how much it can really cost.

The purveyors of credit, as with any other potentially dangerous product, need to sell it responsibly. Most of the time in Canada, they have. But on credit cards, the banking industry has some work to do.

What the federal government is forcing on the bleating bankers - measures such as demanding clearer disclosure on rates - are common-sense rules that curb some of the more unseemly practices of the industry.

The changes are so common sense, in fact, that many people would be surprised and dismayed to find out that their banks were treating them this way in the first place.

Then again, we are talking about banks. Maybe they wouldn’t be so shocked that the government is worried that lenders have an unfortunate tendency to allocate the payments made by customers in ways that increase bank profits, rather than cutting costs for clients.

The fuss from the banks is all the more off-putting considering they avoided what they most feared - a cap on interest rates. On that one, they had a good argument, and the government listened. Capping rates would have naturally led to credit being cut off to many borrowers, forcing them to payday lenders and other even higher-cost sources of cash.

The opposition Liberals may play politics by saying that the changes are not enough because, for example, mandatory advance notification that your rates are going to go up is no real help. But clearly, it is. A consumer who knows her credit card interest rates are going up can plan ahead by cutting back spending or ramping up payments.

The fallback argument from banks - espoused by Canadian Bankers Association (CBA) head Nancy Hughes Anthony, that it will cost banks hundreds of millions of dollars and that cost will be borne by consumers - is a bit disingenuous.

For starters, if banks have to increase interest rates a touch to cover the cost of including in statements a calculation of how long it will take you to pay off your bill with just the minimum monthly payment (how much ink can it take to print “practically forever” anyway?), consumers can blunt those expenses. They just have to use the disclosure to keep interest costs down by paying on time.

Banks also may benefit. When card portfolios perform better because customers are more responsible, loss rates go down. That helps the bottom line and the companies’ stock prices.

Ask Canadian Imperial Bank of Commerce shareholders how they would feel about something that helps cut defaults on credit card loans. The bank’s shares had their biggest plunge in four months on Aug. 26 when CIBC disclosed credit card losses that played a big part in why the bank missed profit estimates. That wiped $1.4-billion from its market value in one day. That’s a big price.

Banks can also benefit from better-performing card portfolios because they should fetch higher prices when sold to investors through the securitization market, the end destination for many credit card loans.

In other words, there are a lot of moving parts, and the net result of higher costs predicted by the CBA is not at all clear.

More than that, what the federal government is doing is a small but important part of creating a better credit culture in Canada, one in which borrowers learn to live within their means. Yes, 70 per cent of us pay our credit card bills on time. With respect to bankers who point to that as a sign of good credit management, that shows there’s room for improvement.

Given how the economic consequences of overborrowing have become all too clear of late, and how much the Canadian banks have revelled in their status as leaders in responsible lending, it’s time to surrender this fight.



Boyd Erman, Oct. 07, 2009 Theglobeandmail

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