Here, by Shahar Ziv, taking a deep dive into Norm Silber's and my proposal. Excerpt:
Sadly, the coronavirus pandemic isn’t the first catastrophe to fuel consumer credit challenges. In a paper, Thriving on Adversity: Disclosing Corporate Mistreatment of Consumers Caught in Hurricanes Katrina and Rita and Exploring the Consumer Movement's Response to Crisis and Catastrophe, which was published in the Loyola Consumer Law Review, Norman Silber, the proposal’s lead author, outlined the progressive obstacles that consumers faced in the wake of Hurricane Katrina: Americans let credit balances grow and could only afford to make minimum payments; high interest rates caused the amount owed to increase rapidly, which reduced the amount of available credit; credit scores started to drop, reducing credit lines and access to affordable borrowing; delinquencies and bankruptcies began to rise causing a strain on the national economy. “There were huge problems created as consumers, who were out of work and had extra expenses, all of a sudden couldn’t make installment payments,” Silber told me via phone. “Banks and credit card companies who were supposedly generous by postponing payments and interest, just deferred the problem and eventually starting charging consumers additional fees and getting tough with them.”
Applying the lessons learned from Katrina against the backdrop of the Covid-19 crisis, Silber and Sovern developed a proposal, called the “Credit Card Interest Relief During the Pandemic Act” or CIRPA, to allow consumers and small businesses financed through credit card borrowing to have the credit they need to get past this crisis.