CHESSNOID

We have new laws that will supposedly help consumers, but it never works out that way.  It seems like lobbyists get politicians to do what is in their best interest.  On paper it does sound good that  consumers won’t be robbed anymore by the credit card companies, but history tells us it will actually hurt consumers.

Dec 19 (Reuters) -

The new credit-card rules approved by U.S. regulators to curb unfair practices will reduce liquidity at a time when consumers need it the most, and in turn impact consumer spending, prominent banking analyst Meredith Whitney said.

“The regulators believe they are actually doing what is best for the consumer… we argue that the unintended consequences of such actions will at least do a commensurate amount of harm to the economy by stifling consumer spending,” the Oppenheimer & Co analyst wrote in a note to clients.

U.S. regulators on Thursday approved new rules to curb unfair credit card practices such as surprise fees and interest rate hikes. The rules are due to take effect on July 1, 2010. For details, please double-click [nN18354608]

Analyst Whitney said this regulation will reduce the current economics of the credit card industry to a level in which lenders will ultimately choose to provide fewer credit lines to fewer customers.

The inability to maintain pricing flexibility on unsecured loans will result in a “dramatic” reduction of risk taking and therefore credit lines outstanding, Whitney said.

“This line reduction will strain credit quality not just for credit card loans but for all consumer loans,” she added.

I agree with Whitney and she has been spot on about the banks in her earlier assessments.  The banks are just looking for another way to hide their losses.  Remember that these banks who issue credit cards are the same ones asking to be bailed out by taxpayer money. Doesn’t seem right or ethical. How do they get away with it?