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Ever since the extent of this economic crisis became clear, Washington politicians have been informing us that keeping a torrent of credit flowing to consumers and businesses justifies government bailouts and other extraordinary measures.

President Obama recently pledged to "focus on restoring the flow of credit that is the lifeblood of a growing global economy." House Majority Leader Steny Hoyer, a Democrat, said during the debate over last fall's TARP bailout that, without it, "credit, the lifeblood of any economy, might dry up across America." And the Treasury Department claims to be ensuring that credit is "flowing again to entrepreneurs and business owners."

Yet Mr. Obama signed legislation this afternoon that levies a slew of new regulations on credit card companies -- which lenders say will actually reduce the availability of credit. That's from no less an authority than American Express CEO Kenneth Chenault, who said his concern is with "credit being available, particularly to consumers who need it," according to Bloomberg.

Which, if you've been following along so far, is exactly the opposite of what Mr. Obama and his political allies say they wanted to achieve.

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This post was written by Stephanie Condon.

While President Obama met today with executives from the leading credit card companies, two senators called on the Federal Reserve to immediately implement an emergency freeze on interest rates tied to existing balances on credit cards.

The Federal Reserve plans to implement a new set of rules for credit card lending beginning July 2010, but that is too long to wait, Senators Chris Dodd (D-Conn.) and Chuck Schumer (D-N.Y.) said in a letter sent today to Federal Reserve Chairman Ben Bernanke and other regulators. Companies are increasing interest rates now before the new rules go into effect, they said.

"Consumers describe situations to our offices in which the interest rates on their accounts have doubled or tripled overnight, without any misconduct on their part," the letter says. "This kind of practice clearly violates the spirit and intention of the rules, even if the delayed implementation date has the effect of making such behavior legal."

Read full post…

This post was written by Stephanie Condon.

While President Obama met today with executives from the leading credit card companies, two senators called on the Federal Reserve to immediately implement an emergency freeze on interest rates tied to existing balances on credit cards.

The Federal Reserve plans to implement a new set of rules for credit card lending beginning July 2010, but that is too long to wait, Senators Chris Dodd (D-Conn.) and Chuck Schumer (D-N.Y.) said in a letter sent to Federal Reserve Chairman Ben Bernanke and other regulators. Companies are increasing interest rates now before the new rules go into effect, they said.

"Consumers describe situations to our offices in which the interest rates on their accounts have doubled or tripled overnight, without any misconduct on their part," the letter says. "This kind of practice clearly violates the spirit and intention of the rules, even if the delayed implementation date has the effect of making such behavior legal."

Read full post…