The Spectacle Blog

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

By on 5.22.09 | 11:21PM

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.)

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