Today, legislation passed last year to prevent bad practices by credit card companies goes into effect. So, woo! But also, boo! Because, as Kevin Drum notes, credit card companies are developing a lot of new work-arounds to take advantage of consumers. This is entirely predictable, and luckily Obama and congressional Democrats have a plan to solve it: Create a new agency dedicated to consumer financial protection that can respond nimbly to changes in consumer finance.
"If credit card companies come up with new tricks to confuse consumers, the new Consumer Financial Protection Agency can look out for those problems, look at for consumers, so we don't see bad credit card practices coming back into play," said Assistant Treasury Secretary Michael Barr this afternoon.
The efforts of credit card companies to circumvent regulations -- like jacking up interest rates as much as they could before the laws came into effect -- demonstrate why consumer financial regulation can't just be a second priority at seven different agencies. It's time to treat this issue with the seriousness it deserves by streamlining bureaucracy and mandating the new agency to focus consumer lending all the time, not just in the wake of a crisis.
-- Tim Fernholz
