CFPB to Suggest Changes to CARD Act Addressing Stay-At-Home-Mom Issues

Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), announced he will propose a change to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 and Federal Reserve regulations that critics have charged bars stay-at-home mothers from obtaining credit cards.  The issue at hand is the requirement that credit cards only be issued to people who have an individual income, rather than those who have access to household income.

Today a non-working spouse cannot get a credit card because she or he doesn’t get a paycheck, despite possibly having free access to the household’s income. The agency will propose the rule before Congress reconvenes after the election, according to Bloomberg.  This change would affect all major credit card issuers in a positive way but especially retail credit card issuers.  One of the hardest things to do as a credit card issuer is to acquire a new customer.  Here you have people with the ability to pay their bills who have to be denied because of a poorly constructed provision of the CARD Act.

I’ve been very vocal about how the individual income requirements of the CARD Act and the Federal Reserve’s subsequent directives are shortsighted and ignore the fact that many non working spouses have ready access to their household’s income.

Removing the individual income requirements is a common sense alternative to the CARD Act’s punitive individual income requirements that pretend only working people deserve access to credit card products. This potential “win” for consumers is being positioned as a stay-at-home-mom issue because of the disproportionate impact on women.  While that’s completely true, it’s more accurate to call this a stay-at-home-parent issue as it impacts either gender the same way.

This is a smart move by the CFPB and is an example of common sense rule making. Lawmakers who were anchored to the individual income requirement were out of touch with the reality of how most household economies operate.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.