Congress this week missed the boat when it tackled abuses in the credit-card industry.
The legislation reined in interest rates and fees, but did absolutely nothing about the major abuse—issuing credit cards to individuals with inadequate incomes or multiple cards with unrealistic limits.
Say Joe Blow earns just enough to pay for using up to $1,000 in credit. Okay?
Noting from his credit report that he has managed to make his payments without problems, four other card issuers each grant him credit with $1,000 limits.
Get the picture?
Well, Joe now blows his credit wad and maxes out all the cards. Voila: bankruptcy.
Federal law should prohibit issuance of additional credit if existing cards already have limits totaling his ability to pay.
Simple. Didn’t take an MBA or CPA to figure that out. (24 MAY 2009)
