American Elephants

More Regulation: No Credit Cards for Moms! by The Elephant's Child

Oh dear,  those wise elites in government really don’t think the ordinary folk who pay their salaries are very bright.  They are so anxious to protect us from ourselves.  Lawmakers apparently believe that Visa, Mastercard and Discover and  might not have the incentive to properly manage their own credit risk. If not aided by new regulations from Congress, people might run up more debt than they could repay — like the elected officials who have run up the national tab by$1.2 trillion just this year.

The Federal Reserve Board has issued the specific regulations called for in the Credit Card Accountability, Responsibility, and Disclosure Act (CARD).  I love the way the acronym comes first, then they figure out the name. The name is a little odd for a regulation that prohibits private companies from acting independently.

Federal Reserve Governor Elizabeth Duke declared the new rules to be a milestone in the effort to ensure that consumers who rely on credit cards are treated fairly.

It’s that old bugaboo “consequences.” The law is widely interpreted as prohibiting millions of stay-at-home-moms, and stay-at-home-dads from obtaining credit cards of their own. The “ability to pay” regulation requires credit card applicants to have an independent source of income to open an account or else find a co-signer.

(a) General rule. (1)(i) Consideration of ability to pay. A card issuer must not open a credit card account for a consumer…unless the card issuer considers the ability of the consumer to make the required minimum periodic payments under the terms of the account based on the consumer’s income or assets and current obligations.

(ii) Reasonable policies and procedures. Card issuers must establish and maintain reasonable written policies and procedures to consider a consumer’s income or assets and current obligations…It would be unreasonable for a card issuer to…issue a credit card to a consumer who does not have any income.

Homemakers actually do most of the household purchases, and over 45,000 of them have signed a petition  of protest that has gone to the Consumer Financial Protection Bureau. It’s really special being regarded as incompetent.


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