Why Credit Card Companies are so Mean

[crazy canuck]

Actually, you don't even need to add those words--based on what you wrote I figured I had left the modifiers off, but when I went back and read it, they were there to begin with.

I am incredulous that there are a rash of single people that are buying complex life insurance policies that shield their income from taxation (after they have maxed out there other retirement accounts) that would then be dissuaded from doing so because a disclosure form says it is "generally" a bad idea. If they are sophisticated enough that they are seeking out the investment alternative, they understand they aren't the "general" case.

What is much more likely--and in fact more common--is a bunch of single people that vaguely know responsible people should have life insurance buy policies even though they don't have any dependents.

So.  Should the government be circulating information which is not accurate in an effort to regulate choice of product?

[Malthus]

The problem arises when the terms are complex. It may well be the case that the terms are not difficult to understand due to a deliberate attempt to confuse and deceive, but simply because the subject matter is one which is reasonably complex. In that case, cavaet emptor may not be sufficient - again, more disclosure obligations may make the situation worse and not better when the disclosure adds details that the average person does not understand, or is more material than they can be expected to absorb.

That is a consideration that competes with the other general consideration, that state-nannyism is basically a bad idea, and outcomes are more efficient if only people are allowed to do what they want, freeing human ingenuity - that didn't work so well in other lending situations such as mortgages.

I agree.  I am not sure what can be done about transactions that by their very nature have the potential to be complex and difficult to understand.  One possible solution is to create higher standards of duty perhaps akin to the broker requirements to know their client.  But then that of course would likely take away access to credit cards from the very people this legislation is aimed at helping.

From the summary article:

Ability to pay
Card issuers must consider the consumer's ability to make the required payments under the credit card's terms before raising limits or issuing a new card.

Agreed that this will likely mean poor credit risks will have less access to credit cards. Not yet sure whether this is a good thing or a bad thing.

[alfred russel]

Actually, you don't even need to add those words--based on what you wrote I figured I had left the modifiers off, but when I went back and read it, they were there to begin with.

I am incredulous that there are a rash of single people that are buying complex life insurance policies that shield their income from taxation (after they have maxed out there other retirement accounts) that would then be dissuaded from doing so because a disclosure form says it is "generally" a bad idea. If they are sophisticated enough that they are seeking out the investment alternative, they understand they aren't the "general" case.

What is much more likely--and in fact more common--is a bunch of single people that vaguely know responsible people should have life insurance buy policies even though they don't have any dependents.

So.  Should the government be circulating information which is not accurate in an effort to regulate choice of product?

Sorry I went away for a while.

No it should not. However, what I wrote is accurate. If a majority or significant minority of certified financial planners disagree with that, then I'd agree it should be amended in a way that is accurate but still gets across the point of what life insurance protects against and that children typically don't need to be insured.