Toothless Tiger

No, this isn't another post about you-know-who. It's about the concept of regulation, and I thought it appropriate, with the new credit card law taking effect this week.

The law does a few good things, like requiring notice of interest rate hikes, restricting abusive fees and controlling the availability of cards to college-age kids. But there is no cap on interest rates, and there's nothing to prevent the issuers from arbitrarily lowering -- or even raising -- the credit lines attached to those cards.

Personally, I think credit card agreements should be more contractual instruments. You agree with the issuer on terms up front for a period, say, up to five years, in which your credit line is fixed and they can't raise your interest rates beyond a certain level above prime, unless you show a pattern of delinquency. We should live so long.

What really needs attention, as I've observed many times before, is the FICO score system (note the four-letter acronym beginning with "f."). If you pay off -- and cancel -- your credit cards tomorrow, you're in danger of lowering your credit score. So the experts tell you, pay the card off -- not too quickly -- and leave the account open. But the card issuers may choose to cut your credit line anyway (which also lowers your score). So you can't even say, take this card and shove it.

But I digress -- back to the bigger issue. I like the idea of small government, too, but we expect government to provide, at the very least, for our safety and security. To me, this means, by extension, protecting us from becoming victims. This requires REGULATION. You hate what the big banks are doing to you, but is government on your side? After being blamed for causing a crisis rivaling the Great Depression, have financial institutions, Wall Street or the insurance industry been required to change a single practice (other than the few outlined in the credit card law)? The FDA is supposed to be regulating the pharmaceutical industry; is it effectively preventing harmful drugs from making it to market? In general, government is much more effective at paperwork (or electronic file) generation than doing the most significant part of its job.

Sorry folks, the free market doesn't work without rules of the road. The President and Congress need not only to provide us with reasonable (what a devil of a word that is!) rules, but also to provide a government large enough -- and dedicated to -- enforcing those rules. Can you blame the Tea Party people for being fed up with a government that just isn't there for them? If it were, size wouldn't matter.