You-Won't-Get-A-Credit-Card-Unless-You're-Rich Bill is Now Law

American Spectator ^ | May 22, 2009 | Matthew Vadum

[vadum]

Amidst the anti-market frenzy in Washington, D.C., President Obama today signed into law a bill that will drive up interest rates on credit cards and force people with good credit to pay more to subsidize people with bad credit.

The bill, which extends a big, fat middle finger to credit card companies by limiting their ability to price their products according to risk, swept through Congress this week at breakneck speed.

According to Edward L. Yingling, CEO of the American Bankers Association, provisions in the legisation "will undermine the availability of credit." Credit cards are "a strong economic driver and are relied upon by consumers and small businesses to make payments and to bridge short-term financial gaps," he said.

Yingling said the legislation "fundamentally changes the entire business model of credit cards by restricting the ability to price credit for risk."

As John Berlau of the Competitive Enterprise Institute noted, limiting consumers' choices and interfering with sensible risk-based pricing practices "will result in less availability of credit and actually force card holders to pay higher rates in many instances."

The attack on the credit card industry was funded in part by left-wing philanthropist George Soros through his foundation, the Open Society Institute, as shown in "Consumers and Credit Cards: Leftist Watchdogs Attack An American Success Story," by Sara Wille, Foundation Watch, September 2006. (A related article is "Demonizing Subprime Lenders: Liberal Groups Oppose Consumer Choice," by Melanie Sans and Matthew Vadum, Organization Trends, October 2007.)

[Greysard]

"will result in less availability of credit and actually force card holders to pay higher rates in many instances."

Country-wide that might be actually a good, though bitter, medicine. Too much of easy credit often leads to mountains of debt, since only a small percentage of population can tell themselves "I don't have money to buy this" and walk away from the purchase.

[Uncle Miltie]

"people with good credit to pay more to subsidize people with bad credit"

False. The market will segment as people with good credit are allowed into programs with low fees and rates. People with bad credit will be allowed into programs with high fees and rates. Only stupid people with good credit will stay in pools and cross-fund people with bad credit.

[Hugin]

No, this really won’t change much. The credit card own Congress, Dems and Pubs. They made sure there was no cap on interest rates, which is what they really care about.

[devere]

The banks have been abusing some credit card customers, and now are screaming about this very mild reform bill. I have no sympathy for them whatsoever in this matter.

[Danae]

ROFL

What... you mean credit card companies won’t be able to charge poor people 29% interest anymore?

WTH!?

[Irish Eyes]

The attack on the credit card industry was funded in part by left-wing philanthropist George Soros through his foundation, the Open Society Institute, as shown in "Consumers and Credit Cards: Leftist Watchdogs Attack An American Success Story," by Sara Wille, Foundation Watch, September 2006. (A related article is "Demonizing Subprime Lenders: Liberal Groups Oppose Consumer Choice," by Melanie Sans and Matthew Vadum, Organization Trends, October 2007.)

Amazing how often his name pops up.

[conservative cat]

The banks have been abusing some credit card customers, and now are screaming about this very mild reform bill. I have no sympathy for them whatsoever in this matter.

I agree with you. Some of what they have pulled is scandalous.

[vadum]

bump

[Hawk1976]

The good news is that this will crimp 0’s fundraising next time, since there won’t be so many credit card numbers to be defrauded.

Second, yes these banks are crooks. The Republicans should have slapped down universal default, alas, they were to busy shutting down online gaming and trying to pass gangbanger amnesty.

[steel_resolve]

Thank you- someone said it

[RSmithOpt]

Not necessarily. I believe that the bill contains a clause to allow CCard issuers to start charging interest almost immediately from the date of purchase and billing cycles are to be shortened again.

[eyedigress]

If they charge a damn dime on me, they have spit the bit. My bank tried to hit me with a 15.00 dollar hit last month and I called and they reversed it right away. Be vigiliant on this crap.

[packrat35]

You know, this article is total BS. It used to be the law until about 8 years ago, that the maximum interst rate was 21% in TN. It varied in other states, some as low as 10%, but every state had a maximum rate, and the credit industry did just fine.

Then they bought off the politicians and got that default nonsense allowing them to charge as much as 34%, then got the bankruptcy laws changed to trap customers. The credit industry did just fine back then and there was plenty of credit.

The banks have continued to rape customers left and right and then stick us with the bill now that they house of cards has fallen.

[Androcles]

No sympathy - the writer may try and present this as a leftwing socialist plot, but the companies have been commiting the sin of usury. I have no sympathy for them...

[poobear]

A lot of these Dem Congress critters are up for re-election next year. Guess they needed something to schmooze the sheep into voting for them Just like my big Lib Congressman Greyson is introducing a bill to guarantee 1 week paid vacation for all full and some part-time employees when 75 to 80% of employers already do so.