06/21/2009 05:12 am ET Updated May 25, 2011

Credit Card Reform Act: Washington At Its Worst

The last time I checked, we have some serious issues going on in our country and the world. The continuing issue of the wars in Iraq and Afghanistan, the unbelievable toll that has taken on our men and women in uniform, a burden we will shoulder for generations, the current economic depression we are in and will be in, and far far more.

And yet, the top 'news' this week out of Washington is the so-called Credit Card Consumer Bill Of Rights, one of the most useful and unneeded pieces of legislation ever EVER created out of Washington and a prime example of no matter what your top worry is, there is a snowball's chance in hell that it will ever get fixed by our current crop of 'leaders.'

Consumer groups who are touting this bill as a success, bloggers who are smiling and happy about it and consumers who think somehow their representatives did something for them finally are missing two key and really really important facts about the credit card issue.

First, this is not a utility issue, or an issue of quality of life or needed care. Let's start with a core fact.


It's true. Having a debit card, as I do, and my company does, means you don't have to carry around a load of cash all the time, but you don't need a credit card. Ever.

What has happened therefore, is our government spent precious time and energy protecting stupid people from getting taken advantage of. I don't consider this a fundamental role of government.

If you are stupid enough to pay 30% interest to borrow money, you should be penalized.

If you are stupid enough not to pay your bills on time, or accept your rate being jacked up overnight, you should be penalized.

My colleague Max Bernstein talks about the circle and when the far right meets the far left. This may well be one of those moments.

The fundamental issue facing the United States and its occupants (me, you, everyone) is that debt is too easy to go into; this is a moral, lifestyle and financial issue for all of us. Our government, our businesses and our neighbors are in hock up to and over their eyeballs and the gradual realization of this and our acceptance that the new frugality is really the old reality coming back for a visit has to happen before we get our economy moving again.

Debt, not credit, is the problem. And I am firmly against any plan, program, law or effort which makes debt EASIER to live with, not harder.

There is another key point about what happened in Washington. I know of two groups who are thinking about launching a new bank, an ethical bank if you will, here in the United States.

Where's their competitive advantage? If a credit card company did offer cards at a rate of 15% with no rate increases, don't you think people would flock to that? Of course.

We are a capitalistic society. Capitalism is the most Darwinistic of economic systems. We need to let the stupid be eaten for the smart to thrive.