Undue Credit

On the corner is a banker with a motorcar
The little children laugh at him behind his back
And the banker never wears a mack
In the pouring rain, very strange
--The Beatles

Laurie Petersen notes that credit card issuers are increasing fees--many in stealthy ways. The implication of many such pieces is that credit card companies are gouging customers and being unfair. As Laurie describes, some even write their representatives in Washington to complain. And there is a bill on the Senate floor seeking to require/regulate credit card issuer behavior in this area.

We need to be careful here. If a credit card issuer has violated a contractual agreement, then it should be subject to prosecution under the law. But if a company wants to abruptly change its fee structure in a manner that does not violate previous agreements, then there should be no regulation that prohibits such.

It strikes me that what the credit card companies are doing is poor business policy. And if it is, then customers should vote with their wallets and go elsewhere.

When instead folks seek regulatory assistance from bureaucrats, they are essentially seeking claims on property rights that are not theirs (i.e., they don't want proprietors to freely make operating decisions). Moreover, by abdicating responsibility to undertake due diligence when purchasing credit, consumers are likely to promote the inefficiencies they claim to abhor.

Classic moral hazard, cookie.