Another government "fix" becomes another government failure

By Norvell Rose

How many times must we learn the painful lesson? What will it take for us to recognize the near-universal rule governing the outcome of any unwieldy Washington-driven "reform" effort? That rule is: When the government attempts a big fix for something, watch out below! Duck and cover! Run for your liberty-loving life! The fix will, in all likelihood, come crashing down around us; even as seemingly oblivious lawmakers continue to pat themselves on the back for a job well done.

Such is the sorry case with the so-called credit card reform act of 2009 — all but buried among the wrack and rubble of a multitude of such massive makeover attempts by the liberal crusaders. In its predictable activation of the law of unintended consequences, this sweeping "consumer protection" law should be a stark lesson in what not to do with regard to another far-reaching reform effort — the health care fix.

As background on the "Credit Card Accountability, Responsibility and Disclosure Act of 2009"...

Let us recall from mid last year the self-congratulatory ceremony with which the Democrats praised themselves and paraded their legislative achievement in front of the American people. Ah, those benevolent, big-hearted Dems. When they assume the role of champs of the beleaguered American consumer, the consumer will assume the position of chumps in their political zoo.

Just this week, the credit card law passed by the Democrat-controlled Congress and signed by President Obama took full effect. And just now is its full impact starting to be realized. But even as the negatives of the law pile up, the same set of careless lawmakers seem hell-bent on a far more hazardous prescription to reform American health care — one that also touts historic "consumer protections." As I said, "Watch out below!"

Regarding the 2009 credit card act, USA Today reported in May of 2009:

In the most sweeping changes to the credit card industry in 40 years, President Obama signed into law Friday an act to restrict practices he says contributed to consumers' financial problems during the recession. "With this bill we are putting in place some common sense reforms designed to protect consumers," Obama said at a signing ceremony at the White House.

Duck and cover! Whenever a politician uses words and phrases such as "sweeping" or "reforms designed to protect consumers," you can bet the real results won't be what the government engineers envisioned. I said earlier we're chumps. Well, we're also chimps when we allow Washington to monkey around with free market forces.

In describing the legislation, Senator Christopher Dodd, D-Conn., chairman of the Banking Committee, demonstrated how foolishly unaware he is. Said the doddering Dodd last Spring:

This is a victory for every American consumer who has ever suffered at the hands of a credit card company.

Run for your liberty-loving life! Now we're suffering in the grubby clutches of government interference as much as, if not more than, at the hands of the credit card companies.

About 90 million households carry credit cards. Almost every adult in America has at least one, with some 1.4 billion credit cards issued. So when the full effect of the law now reveals itself — when the mask of government "help" is ripped away to reveal the hurt — it's a very big deal. And a very big surprise to those who still believe in government's big brotherly blessings.

Check out how Associated Press Personal Finance Writer Eileen A.J. Connelly summarized the "oops" factor in the "consumer protection" law. And remember, the legislation became law last May, but all its provisions have only recently taken effect. Connelly concludes:

During the past nine months, credit card companies jacked up interest rates, created new fees and cut credit lines. They also closed down millions of accounts. So a law hailed as the most sweeping piece of consumer legislation in decades has helped make it more difficult for millions of Americans to get credit, and made that credit more expensive.

Ouch! Like many of you, I found some of my rates suddenly jacked up and my limits abruptly lowered. Right when we Americans need a helping hand, we get a governmental smack in the face. Thanks, Congress. Good job, Mr. President. And now, back to ramming, jamming and cramming health care reform.

AP reporter Connelly continues with her assessment of the credit card foul-up...uh...fix:

It wasn't supposed to be this way.... Card companies had nine months to prepare [for the changes imposed by the legislation]. They used that time to take actions that ended up hurting the same customers who were supposed to be helped.

Well, it wasn't as though there was no warning about the supposedly unanticipated downside for consumers. The American Bankers Association, a banking industry trade group, called the new fees and restrictions an "unintended consequence" of the legislation. In fact, the ABA warned as much last April in a letter to Congress.

Ah, but Congress and the President know better. They're smarter. More savvy. The brainy bunch. Yeah, right. Or let me say instead — wrong, left.

A few months ago, in the fall of 2009, an online report for Fox Business featured an interview with Gail Cunningham, Vice President of Public Relations at the National Foundation for Credit Counseling. Regarding the credit card law, the report said:

Cunningham compared the [credit card] legislation to a boardwalk game of "Whac-A-Mole," where a new furry critter pops up each time you smack one back into its hole. "Here comes the government to knock down the mole, and doggone it if he doesn't rear his ugly head somewhere else and find another way to bite," she said.

Well, Ms Cunningham, allow me to borrow from your analogy and offer a different perspective. I'd say the mole in this game is the government, not the credit card industry — a legal, widely accepted, revenue-sensitive, profit-driven enterprise in our free-market system. Indeed, it may have flaws. But a truly free market and not Mad Hatter government meddlers should be allowed to offer a fix.

And if anything deserves to be whacked back into its dirty little mole hole, its the near-blind government do-gooders. Almost without exception, it is they who present the real danger to American consumers.

© Norvell Rose