Banks’ credit card bluster rings hollow

Archive for Wednesday, May 07, 2008

By David Lazarus
May 07, 2008 in print edition C-1

Ijust love it when the credit card industry threatens to take its toys and go home.

That, in effect, was what card issuers said in response to the announcement by federal regulators last week that they planned to crack down on some of the industry’s more consumer-unfriendly practices.

To increase fairness, the Federal Reserve and two other agencies would, among other things, require card issuers to mail out statements at least 21 days before a payment’s due date and prohibit issuers from applying partial payments only to balances with the lowest interest rates – thus leaving costlier, higher-rate balances intact.

Edward Yingling, president of the American Bankers Assn., said in a statement that the Fed’s proposals represent “an unprecedented regulatory intrusion into marketplace pricing and product offerings.”

He said the measures would “result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards.”

In other words, if the industry had to play by the proposed rules, it wouldn’t be able to offer as much plastic to as many people.

Nonsense. No amount of regulation has ever resulted in card issuers scaling back their offerings. More than 5 billion solicitations were mailed to U.S. households last year alone.

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