Ah, yes, once again, we see what happens when clueless politicians (in this case, the Democrats who rammed the Credit Card Act) plant their noses squarely into the cement wall that is called the Law of Unintended Consequences? Wall Street Journal (emphasis mine):
The suggested measure is "intended to enhance protections for consumers and to resolve areas of uncertainty so that card issuers fully understand their compliance obligations," according to the Fed proposal.
But retailers say the measures go beyond the original intent of the Credit Card Act that sought to limit financial institutions from offering credit cards to college students who don’t have income to pay bills.
So, no income or low income means no credit card at worst or very low limits on the card since only that person’s income could be used. Rich Daddy’s income just didn’t apply (or Mom’s). Problem for students solved by our paternalistic Congressional overlords as low limits means low capability to get into high debt.
Uh-oh….not quite. Maybe for students, but what about other people with low personal incomes trying to get more credit:
Stay-at-home Moms also fit that description, and from now on, they’re going to have a hell of a tough time getting credit in their own name:
Yeah, that’s a bug (vs. a feature).
"It is astonishing that people have forgotten how difficult it was 40 years ago, particularly for women, to establish credit," said Ms. Fortney, who represents banks and retailers on consumer-finance issues. "This would really take a lot of women back to where they were in the early 1970s."
In fact, if the rules are strictly applied, they’re going to impact a lot more than just stay-at-home Moms. Most women still earn less than their husbands, meaning that they’re going to end up with less ability to secure credit in their own name than their husbands have. That translates into less economic power to, say, open a business using her credit, or leave a bad marriage, because you might not be able to get a mortgage on your own with only a limited credit history. Presumably, more women are going to end up as joint-account holders with their husbands, rather than limiting themselves to the piddly amount of credit they can secure under their own names.
This is a problem that happens way too often – one reason why more engineers should be elected to office instead of a mere professional hack. By nature of what we do, we have to take into consideration things as a whole – as a system. We know, from training and by personal experience, that "%$*&#" moment when we…
…"touch" something here and find out that the change has rippled through the system on which (or in which) we are working. Sometimes, those ripples have the intended effect and we let out the deep breath and say "Fini!"
Then, there are those other times when we go "How/why did that happen" even though we KNOW something we touched "here" has affected something "over there" that was neither intended or desired. But, at least we are aware of it and actually look for such (most of the time).
Politicians? I have found that they seem to only want to concentrate on a single point solution without taking into account "the system". The flip side is that, as we are seeing with Obamacare and the Dodd financial regulation bills, politicians are changing THE ENTIRE SYSTEM ALL AT ONCE! This, in engineering terms is rather simple; we call hubris like this, in a complicated system, A RECIPE FOR DISASTER!
We are seeing such with Obamacare with the number of waivers, for example, from unions that thought it SUCH a good idea and lobbied hard for it. Now, they are reaping the negatives (as well they should – or the waiver denied so that THEY will along with the rest of us). Financial regulation – sorry dear, rots of ruck!
Although there are those families in which the wife is the higher paid, it is not the norm. In effect, for stay-at-home wives (for what ever reason), they have just been made to be second class citizens, as they now have to rely on their husbands and cannot rely on the household income as an equal partner in the marriage.
One more blow against what used to be the nucleus of the national society – the tradition of marriage. This is just one more brick removed from the "why get married?" answer. In this case, the Feds are saying "married? You are literally worth less – get out and work!".