The Weird Reality of the CARD Act

This is the third installment in what has turned out to be a series of posts about the CARD Act of 2009 and the Federal Reserve’s new regulations to implement same. Last week I discussed how new rules requiring lenders to C Cards (Andres Rueda) consider ability to pay were a non-event. And on Monday I explained that there were not, after all, meaningful restrictions against giving cards to those under 21.

Today I will round up some other don’t-know-if-I-should-laugh-or-cry oddities that I came across in my few hours of research. As good a place to start as any is the other prong in the attack on underage plastic, new draconian restrictions against marketing these evil things to college students.

Section 304 of the CARD Act reads, in part:

No card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor, if such offer is made—
   (A) on the campus of an institution of higher education;
   (B) near the campus of an institution of higher education,
as determined by rule of the Board; or
   (C) at an event sponsored by or related to an institution
of higher education.

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The Incomprehensibly Large Deficit and You

A little while back the Wall Street Journal ran a pair of articles about things we should do in preparation for the inevitable effects of the federal budget deficit. Brett Arends led off on February 4 with The Deficit: How to Protect Yourself and then on the 6th we got a round up of advice from most of the rest of the WSJ staff in Protecting Yourself from the Giant New Deficit: How to Keep the Scary U.S. Debt From Eating Up Your Assets.1981 treasury bond Crop

To a degree, items like these almost comically miss the big picture. They remind me of pieces popular a while back that said that in anticipation of global warming we should all buy land in the Canadian interior. If the government continues on its present course, and I for one am not ready to concede that that is a certainty, it will be an economic calamity that will make us all drastically worse off. The best thing a person can do about the deficit is to vote for leaders willing to do the ugly and unpopular things necessary to reduce it.

But if you can ignore the big picture and focus on only the near term effects of the current and upcoming deficits, it is possible to come up with some coherent advice. Not that the crew at the WSJ consistently do this.

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The CARD Act Does Not Ban Cards for Under-21s After All

In some ways, the CARD Act of 2009 was everything health care reform was not. It enjoyed broad bipartisan support, passing the House and Senate by 361-64 and 90-5 respectively. It dealt with topics familiar to most Americans in simple terms. And it was refreshingly short, at only 33 pages.

C Cards 2 (Andres Rueda) A person might think that would make it a model for other legislation, an example of how effective government can be if reasonable people cast aside their partisan differences and write simple rules to make our lives better.

Then again, maybe not.

The act packs quite a few provisions into its 33 pages. Many of those may turn out to work just as expected. But an examination of what I consider to be one of the more ill-conceived provisions, the ban on issuing credit cards to those under 21 years of age, reveals a yawning gap between what we thought the law would do and what it really does.

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Of Course It’s a Good Time to Buy a Toyota

Here at the Curmudgeon house, there is no question which was the funniest Super Bowl commercial. It was the ad for the local Toyota dealerships. I think what they had in mind was drumming up traffic for their Washington’s Birthday Toyotadealership Crop Sales (a big tradition around here) by quoting from positive car reviews. But what they wound up doing was filling the screen with short phrases in big block letters surrounded with quotation marks.

"The Best"

"Highest Quality"

"Best Resale Value"

Even my 12-year-old understood the quotes in the ironic sense and nearly pulled a muscle falling off the sofa. I’ve been looking around the web for a video to embed, but sadly cannot find one. As of mid-week they were still obliviously running the ad.

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This Just In: Suze Turns Bearish

Yesterday former Merrill broker and municipal bond investor Suze Orman, CFP, sent out word to her legions of followers that they should "be extra careful in how you invest at this point in time." The Oracle of Berkeley continued:

A pullback from here shouldn’t be surprising given the fast and steep rise. Meanwhile there’s the evolving concern that Greece’s debt problems could spread to other countries given the inter-connectedness of all our economies. Add it all up and there’s more to worry about than cheer.

Orman & Welch (copyrighted) I am writing down the date she wrote this "2-8-10" and that day’s S&P close "1056.74" on a post-it I am placing on the wall here at BMA World Headquarters. I would encourage my legion of followers to do the same, so that together we can bask in the wisdom and foresight of the Great Suze.

Orman goes so far as to recommend that investors act on her vision through dollar cost averaging. That’s more than a little asinine, but before discussing it, let me dwell a bit on her reasons for worry. It’s not every day that Suze shares her market timing insights. (In fact, I think this may be the first time ever.)

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