Credit card reform is bad, says the American Bankers Association, an industry trade group. The ABA sent a letter around to Senators on Tuesday warning against credit card reform. They say that new regulation will mean credit card companies will have to cut off credit to some consumers completely “when they need it most.”
“We’re in a difficult lending environment,” Kenneth Clayton, ABA spokesperson, told WSJ. “As you start adding regulatory or legislative requirements on the business of lending, it does make it more challenging.” “Challenging” is secret banker code for “less profitable.” But they do raise a good question: are the increased consumer protections outweighed by the inevitable adverse action—canceled credit cards, increased rates, decreased member benefits and rewards programs, and fewer people and small businesses getting approved—by the credit card companies?