Proposed Credit Card Restrictions Would Set Women Back
Proposed regulations to the Credit Card Act, issued by the Board of Governors of the Federal Reserve System in November 2010 and may go into effect in 2011 have created a firestorm. Today Congresswomen Carolyn Maloney (D-NY), chief author of the Credit Card Act, and Louise Slaughter (D-NY), the principal proponent of the act's provision affecting younger consumers, released a public statement calling upon the Federal Reserve to revise its regulations.
The proposed "ability to pay" regulations would require that credit card companies "consider information regarding the consumer's independent income, rather than his or her household income" before the company allows the consumer to open a new credit card or increase their credit limit.
Although the restrictions were intended to prohibit consumers under 21 from reporting their parents' income to apply for credit cards, the rules are particularly harmful to women. Women, who on the average earn less than men, would be disadvantaged in applying for a credit card in their name. Moreover, the rules could affect spouses who are not employed (i.e. mostly wives with small children) from getting a credit card in their name.
Congresswomen Maloney and Slaughter wrote the Board of Governors protesting the proposal, which they said "goes beyond the intent behind both the specific provisions and the law itself." Representative Maloney said in a press release today, "The intent of Congress was to curb abusive practices to young people, not make it harder for stay-at-home parents or other over-21 consumers to obtain a card. That's why we're asking the Fed to revise their approach."
Representative Slaughter clarified, "While I was proud that my amendment to protect young adults was included in the legislation, we should remember that it was necessary because college students were targeted by credit card companies and too often falling into crippling debt. That provision should not be extended in a way that harms-stay-at-home mothers."
"The proposed regulations set women back to 1975. The proposed regulations would make it much more difficult for women to get credit, especially married women who work in the home," Eleanor Smeal, President of the Feminist Majority Foundation, explained. "Once again care givers would be punished economically by a so-called neutral government regulation. There are other ways of issuing regulations that could deal with credit seekers less than 21 years of age."
The new proposed restrictions would reduce the economic power of women and are particularly harmful for women in abusive partnerships. The Congresswomen asserted in the press release, "Women trapped in abusive marriages may be unable to work due to a controlling spouse, the hallmark of relationship characterized by domestic violence. The availability of an independent credit card may represent her best chance at establishing independence and a path out of a dangerous relationship. By not allowing these women to apply independently for a credit card, the proposed regulations represent a significant - and potentially dangerous - set-back."
Media Resources: Feminist Majority Foundation 1/18/11; Letter of Carolyn Maloney and Louise Slaughter 1/12/11; Press Release of Carolyn Maloney and Louise Slaughter 1/18/11; The Atlantic 1/4/11; The Wall Street Journal 12/31/10