Are CARD Act Critics in Complete Denial?

In law school, I was taught – as are all aspiring lawyers – to perfect the art of arguing any and/or all sides of a case. The lawyer’s mantra – “If you can’t beat on the facts, beat on the law. If you can’t beat on the law, beat on the facts. If you can’t beat on either the facts or the law, beat on the table.”

The American Bankers Association has been a vociferous critic of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). According to a recent article in the Wall Street Journal, “During congressional debate on the credit-card bill, banking groups such as the American Bankers Association, or ABA, argued the proposal would result in a significant pull-back in credit while increasing the cost of credit.” To wit, the unintended consequences of this legislative effort would condemn consumers to wander for eternity through a credit desert.

[Consumer Guide: How the Credit CARD Act of 2009 Affects You]

The Act was one of a series of laws passed to compel institutional accountability by injecting greater transparency, fairness and sanity into a system replete with A.D.D. terms and conditions, incomprehensible legalese rivaling the phraseology of Lewis Carol’s Cheshire cat and voluminous contracts that made Charles Dickens’ “A Tale of Two Cities” look like a short story. Five years of irresponsible borrowing, lending and spending had hurtled borrowers down a rabbit hole where first none were left behind, then none left standing, finally ending as those who had clawed their way to the surface were being unceremoniously flung back into the credit vortex. Trillions lost, millions of homes foreclosed and accounts closed, credit limits slashed, credit scores trashed, interest rates and fees flying to and fro.

The final major piece of the tri-parte CARD Act regulatory puzzle was implemented by the Federal Reserve last August. The newly minted Consumer Financial Protection Bureau – created by the Dodd-Frank Act – will assume enforcement of the CARD Act beginning July 21^st of this year. As part of its preparations, the CFPB is holding a conference on February 22^nd to evaluate whether we are looking at a light at the end of a long, dark, winding tunnel – or the headlamp of the oncoming economic death train our fine financial services friends have warned us about.

We know that banks have engaged in a creative fee frenzy since the CARD Act imposed greater disclosure requirements and longer waiting periods, and restricted their ability to raise or create new rates and fees. Supposedly the storm clouds had gathered, the war party was painted in full battle regalia, dancing around the bonfire, the charge down the hill was imminent and then…

Are CARD Act Critics in Complete Denial? (cont.) »

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