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Released: April 19, 2012

A pragmatic decision on credit card fees

Source: Washington Post

OF ALL THE Obama administration’s efforts to beef up financial regulation, none is more controversial than the creation of the Consumer Financial Protection Bureau (CFPB). To foes, CFPB is a menace to free markets; to supporters, it is the scourge of financial rip-off artists. Republicans blocked the appointment of populist Elizabeth Warren as the agency’s first director and tried to block President Obama’s next choice, Richard Cordray. When Mr. Obama used his recess-appointment power to install Mr. Cordray three months ago, he did so at a rally in swing-state Ohio, telling the crowd there that Mr. Cordray’s “job will be to protect families like yours from the abuses of the financial industry.” So it’s notable that consumer organizations are expressing disappointment with one of Mr. Cordray’s first major regulatory actions. Last week, he announced that the CFPB would propose a rule broadly favorable to banks that issue credit cards with low credit limits, high interest rates and stiff fees. These cards, marketed to people with impaired credit, have long been criticized by consumer advocates, who call them “fee harvesters.”

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