The Con-Victim’s Choice
Even conservatives may have difficulty finding fault with this
The Federal Reserve Board moved yesterday to place new regulations on the nation’s credit card industry that would make it more difficult for lenders to raise interest rates and give consumers more time to pay their bills.
If enacted, the regulations would be the most sweeping change in decades, offering consumers more protection against late fees and stopping lenders from making credit offers that regulators deem to be deceptive.
“The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate,” said Federal Reserve Chairman Ben Bernanke. “Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs.”
Representatives of the banking industry are, of course, making an argument that I’d likely make in other contexts (meaning other industries):
“The Federal Reserve’s proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings,” said Edward Yingling, president and chief executive of the American Banking Association. “We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards. In short, everyday consumers will bear the real cost of these proposals.”
Frankly, “reduced consumer access to credit cards” would probably be a good thing. It would, of course, be preferable for credit card users to be adequately versed in their usage and, even better, habituated to live within their means. That being quixotic, however, boundary-type regulation seems more conducive to free-market activity than would be barrier-to-entry-raising regulations such as requiring extensive paperwork and education initiatives of credit-granting institutions.