Congress Plans To Ration Consumer Credit

This morning and afternoon, CNBC has had fairly extensive coverage of the new and expanded consumer finance regulations making their way through the Senate and headed for the House.

Among other features, the bill cuts debit card usage fees. The general effects of the bill are for Congress to exercise price controls over consumer credit providers. This will, of course, result in the rationing of credit to consumers.

Imagine lower-income consumers finally getting to the point of affording credit or debit cards, only to discover that they are no longer available to them, on prior terms, due to increased costs of regulation.

Yesterday's Wall Street Journal carried an editorial co-authored by Cliff Asness, founder of hedge fund AQR. His piece called attention to the very many vague and unspecified instances of language in the horribly-written Dodd financial 'reform' bill. Language making it unclear what is illegal and how penalties will be assessed.

Bill Isaacs, the former FDIC head, was on CNBC expressing his hope that more insane and unworkable concepts get added to the bill, thus making it completely incapable of being passed during this session of Congress.

Between the badly-written, so-called 'reforms,' public and legal attacks on investment banks, and, now, new attempts to curtail, proscribe and limit profitability of consumer lending, the recent federal government actions aimed at the financial sector point to less available capital or credit, higher costs of capital, and the effective rationing of credit and capital on non-price bases.

None of which are good things for our nation or its future economic growth.