[ctt1wbw]

If you're under 21, unless you follow certain stipulations...

MSN Money

So what is next, you can't have a car if you're under 21? You can't own a house if you're under 21? You can't see an "R" rated movie if you're under 21? You can't wear swimming goggles in the pool if you're under 21? You can't own a pocket knife if you're under 21?

But yes, you can still serve in the military if you're under 21, but nope, no Budweiser for you!

The socialist government is getting closer and closer and more into your life every day. When the government tells you that you can't do something like have a credit card unless you do certain things, what's next?

[dcmacdaddy]

Here the exact quote from the subheading of the article.
"A new law bans plastic for those under 21 unless they have enough income or get someone to co-sign. There's no agreement on how much good the legislation will do, though."

So, you can't get a credit card unless [you] have enough income and if you don't have enough income you need to get someone to co-sign.

Oh, the horror.

So, the government having minimum requirements on obtaining personal credit is somehow a sign of the coming socialisation of the country? Egads man, more regulations limiting peoples' ability to take on debt based on the ability to pay back the debt would have been good during the recent housing bubble. I take it you are in favor of people under 21 getting credit cards even if they don't have sufficient income to pay back their debts? Is that a fair assumption?

[ctt1wbw]

No. I think the individual should make that determination for themselves, and not have the government dictate through legislation how people should live and what decisions they are capable and/or incapable of making for themselves.

I for one, do not like having a government employee telling me what is good for me.

[OreoCookie]

Perhaps you should really read the stuff before you post them: from the article (emphasis mine):

Under the new law, no one under age 21 can get a credit card unless a parent, guardian or spouse is willing to co-sign or unless the young adult has proof of sufficient income to cover the credit obligations.

Although the article does not say what sufficient income is, but I suppose if you have a regular job, you can apply for a credit card. (And what's the connection between Obama and the legal age for drinking?)

[Doofy]

Ummm. Isn't it up to the card issuers in The Land Of The Free™ to decide whether they'll give credit to young folks with no observable means of income?

[OreoCookie]

Me quoting the article wasn't meant as an indication one way or the other (personally, I'd be for a requirement independent of age), but to claim that people under 21 can no longer have a credit card (and to connect it with the drinking age) is plain hyperbole.

[ShortcutToMoncton]

Originally Posted by Doofy 

Ummm. Isn't it up to the card issuers in The Land Of The Free™ to decide whether they'll give credit to young folks with no observable means of income?

They already tried that "personal responsibility route" and look what happened there....

greg

[dcmacdaddy]

Originally Posted by Doofy 

Ummm. Isn't it up to the card issuers in The Land Of The Free™ to decide whether they'll give credit to young folks with no observable means of income?

Shhh, that's the Capitalistic Way of doing things. But if B&B Guy embraces the Capitalistic Way of doing things he can't find reason to complain about the government or its increased socialisation. And methinks he is looking for any reason to complain about Obama, not just any *logical* reason to complain about Obama.

(The sad thing is, if he really wanted to complain about the socialisation of government policy all he has to do is look at the bank bail-outs and the bail-outs for the auto industry to see where the government has done massive, massive socialisation.)

[ctt1wbw]

Originally Posted by OreoCookie 

Perhaps you should really read the stuff before you post them: from the article (emphasis mine):


Although the article does not say what sufficient income is, but I suppose if you have a regular job, you can apply for a credit card. (And what's the connection between Obama and the legal age for drinking?)

Perhaps you should read the first line of my post: emphasis mine:

If you're under 21, unless you follow certain stipulations...

[ctt1wbw]

Originally Posted by ShortcutToMoncton 

They already tried that "personal responsibility route" and look what happened there....

greg

But Canadians are the world leaders in personal responsibility???

[ctt1wbw]

Originally Posted by dcmacdaddy 

Shhh, that's the Capitalistic Way of doing things. But if B&B Guy embraces the Capitalistic Way of doing things he can't find reason to complain about the government or its increased socialisation. And methinks he is looking for any reason to complain about Obama, not just any *logical* reason to complain about Obama.

(The sad thing is, if he really wanted to complain about the socialisation of government policy all he has to do is look at the bank bail-outs and the bail-outs for the auto industry to see where the government has done massive, massive socialisation.)

Um, make that DUAL B&B guy. We just got another one in New Mexico.

[shifuimam]

Originally Posted by dcmacdaddy 

So, the government having minimum requirements on obtaining personal credit is somehow a sign of the coming socialisation of the country? Egads man, more regulations limiting peoples' ability to take on debt based on the ability to pay back the debt would have been good during the recent housing bubble.

Indeed, had things like the Community Reinvestment Act not been leveraged to strongarm banks into giving mortgages to people who couldn't afford them, we may not be in the pickle we're in today.

Unfortunately, we've been so insistent on providing credit in the name of progress and equality that now Americans are accustomed to signing on the dotted line to get more free money at a moment's notice. I have a feeling that this kind of regulation is going to be necessary to get things back to a reasonable level.

I suppose that means that we're opening up the government for abuse when this goes through, but the same can be said for any law. Frankly, I think the cosign-or-adequate-income requirement is long overdue. College students don't need credit cards - no nineteen-year-old should be facing credit card debt.

[SpaceMonkey]

Most private student loans require a co-signer, because the loan issuers find it imprudent to loan large amounts of money to people who currently have no income and whose future income is uncertain. The problem these regulations on credit card issuers solve is that, within the credit card industry, there has developed a strong market incentive (gobble up as many new credit card customers as possible, whatever their income) that has overridden the creditor's normal cost-benefit calculation and introduced a huge debt bubble that poses systemic risks to the wider economy. Hence the need for some regulation.

[OreoCookie]

Originally Posted by ctt1wbw 

Perhaps you should read the first line of my post: emphasis mine:

If you're under 21, unless you follow certain stipulations...

I've seen that. If you compare that with the rest of your post (that are all absolutes), it's clear that it's hyperbole. You also don't mention what these stipulations are and whether they're anything new in the industry. Or that to most students who have to work for a living, nothing will change.

[nonhuman]

I wonder if the same stipulations would apply to a charge card like American Express. Barring people from getting a credit card basically means preventing people from building a good credit history, without which it can be very difficult to do a great many things as no credit history is seen as a bad credit history.

[turtle777]

Originally Posted by Doofy 

Ummm. Isn't it up to the card issuers in The Land Of The Free™ to decide whether they'll give credit to young folks with no observable means of income?

Originally Posted by ShortcutToMoncton 

They already tried that "personal responsibility route" and look what happened there....

Another example how government intervention screws sh!t up.

Timeline:

• banks issue credit cards at too rsiky conditions
• banks get in trouble, on verge of bankruptcy
• government bails out banks
• government dictates bank policy

It's pretty clear that the only reason why the banks don't learn any lessons is because they get pampered and bailed out, and don't have to suffer from the consequences of their own dumbass decisions.

Of course, the Dems claim it's due to deregulation. BULLSH!T

The reason is, once, again, government interference, which screws up any free market self-regulation.

To claim that "personal responsibility route" has failed is crap. It was never tried. Banks were never held responsible for their mistakes.

-t

[ctt1wbw]

Originally Posted by OreoCookie 

I've seen that. If you compare that with the rest of your post (that are all absolutes), it's clear that it's hyperbole. You also don't mention what these stipulations are and whether they're anything new in the industry. Or that to most students who have to work for a living, nothing will change.

I read them.... The rest of the stuff is what the UK Nanny State is up to at the moment. Like the goggles thing.

[Doofy]

Originally Posted by ctt1wbw 

I read them.... The rest of the stuff is what the UK Nanny State is up to at the moment. Like the goggles thing.

Oh yeah. Health and safety, don't ya know.

[SpaceMonkey]

Originally Posted by nonhuman 

I wonder if the same stipulations would apply to a charge card like American Express. Barring people from getting a credit card basically means preventing people from building a good credit history, without which it can be very difficult to do a great many things as no credit history is seen as a bad credit history.

Secured credit cards are a decent option for getting started.

[Dork.]

Shouldn't a bank reject someone's credit card application if they don't have enough income, no matter how old they are? (Or give them a secured card, as SpaceMonkey suggested.)

It seems to me the only reason to accept someone under thosecircumstances is to charge them fees up the wazoo when they (inevitably) default. Pile on enough fees, and the bank will make a profit over what was actually spent on the card even when they sell the debt to collections for half the face value....

[SpaceMonkey]

Originally Posted by Dork. 

Shouldn't a bank reject someone's credit card application if they don't have enough income, no matter how old they are? (Or give them a secured card, as SpaceMonkey suggested.)

It seems to me the only reason to accept someone under thosecircumstances is to charge them fees up the wazoo when they (inevitably) default. Pile on enough fees, and the bank will make a profit over what was actually spent on the card even when they sell the debt to collections for half the face value....

Part of the credit card companies' calculus in going after college freshmen is a gamble by the card issuer that the parents will bail the student out of a jam. In a very real sense, this regulation merely formalizes that arrangement, and makes it legally binding. Hopefully it causes some parents to have a closer eye on their children's credit card habits, at least while they are financially supporting them.

[turtle777]

Originally Posted by SpaceMonkey 

Part of the credit card companies' calculus in going after college freshmen is a gamble by the card issuer that the parents will bail the student out of a jam. In a very real sense, this regulation merely formalizes that arrangement, and makes it legally binding. Hopefully it causes some parents to have a closer eye on their children's credit card habits, at least while they are financially supporting them.

And the bigger part of the gamble: the government will bail them out for anything that they can't recover from friends or co-signers.

All this government regulation would not be necessary if they didn't introduce moral hazard in the first place. The government is "fixing" problems that wouldn't exist if it wasn't for other government "fixes".

What I really don't get is how people think that at some point, there are enough fixes in place to make it work. Every fix introduces more unforeseen side-effects and unintended consequences.

-t

[ort888]

OUTRAGE!!!!!!1!

I can't wait to find something to get OUTRAGED!!!!!!!!!!1! about tomorrow. I'll start combing through blogs now to find something and get back to you on it. Whatever it's gonna be, it's gonna PISS ME OFF.

[SpaceMonkey]

Originally Posted by turtle777 

And the bigger part of the gamble: the government will bail them out for anything that they can't recover from friends or co-signers.

All this government regulation would not be necessary if they didn't introduce moral hazard in the first place. The government is "fixing" problems that wouldn't exist if it wasn't for other government "fixes".

What I really don't get is how people think that at some point, there are enough fixes in place to make it work. Every fix introduces more unforeseen side-effects and unintended consequences.

-t

There's not really a history of governments bailing out credit card companies (and certainly in the heyday of credit card companies targeting college students, going back to the late 1990s, government intervention in the financial sector on the scale of today would be unthinkable), so I'm not sure your reasoning holds in this case. The evolution of the credit card into a commodity product, rather than a personalized and exclusive line of credit issued by banks to particularly valued customers, is more responsible for the mad dash by CC companies to grab market share than any government action.

[turtle777]

Originally Posted by SpaceMonkey 

There's not really a history of governments bailing out credit card companies (and certainly in the heyday of credit card companies targeting college students, going back to the late 1990s, government intervention in the financial sector on the scale of today would be unthinkable), so I'm not sure your reasoning holds in this case. The evolution of the credit card into a commodity product, rather than a personalized and exclusive line of credit issued by banks to particularly valued customers, is more responsible for the mad dash by CC companies to grab market share than any government action.

I'm pointing at the big picture.

The government interference that creates crappy outcome can be seen in many areas: mortgages, car industry, other lending (incl. CC)...

The way the current administration (and even Bush) go about this is just completely ass-backwards.

-t

[SpaceMonkey]

Originally Posted by turtle777 

I'm pointing at the big picture.

The government interference that creates crappy outcome can be seen in many areas: mortgages, car industry, other lending (incl. CC)...

The way the current administration (and even Bush) go about this is just completely ass-backwards.

-t

That's fine, but if it doesn't apply to the credit card industry then I'm not sure what it's doing in this thread. In the past, credit card issuers were willing to take on more risk with new cardholders because the only way to grow was to get more market share, not because they perceived themselves to be insulated from risk. The new regulations about issuing credit cards to people under the age of 21 doesn't seem to me to institute a new moral hazard either.

[turtle777]

Originally Posted by SpaceMonkey 

That's fine, but if it doesn't apply to the credit card industry then I'm not sure what it's doing in this thread. In the past, credit card issuers were willing to take on more risk with new cardholders because the only way to grow was to get more market share, not because they perceived themselves to be insulated from risk. The new regulations about issuing credit cards to people under the age of 21 doesn't seem to me to institute a new moral hazard either.

My point is: this regulation is absolutely unnecessary.

Let the banks determine their own criteria whom to give cards, and whom to decline.
If they lose money on the cards, they need to pay for it, and if necessary, go bankrupt.

The only reason why the banks make bad business decisions is because the government keeps bailing them out.

-t

[Dakar V]

I don't think this is about the banks making bad decisions. I think this about slowing down young adults who notoriously grab a credit card and charge away with no knowledge or regard for the consequences.

Don't use this post for a diatribe on personal responsibility. I'm telling you what this seems to be about, not endorsing some point of view.

[ort888]

Originally Posted by turtle777 

My point is: this regulation is absolutely unnecessary.

Let the banks determine their own criteria whom to give cards, and whom to decline.
If they lose money on the cards, they need to pay for it, and if necessary, go bankrupt.

The only reason why the banks make bad business decisions is because the government keeps bailing them out.

-t

You're thinking about this backwards... this law isn't there to protect the banks... it's there to protect the kids.

[turtle777]

Originally Posted by ort888 

You're thinking about this backwards... this law isn't there to protect the banks... it's there to protect the kids.

Oh, I see. Nanny state. I'm not surprised you like it.

-t

[SpaceMonkey]

Originally Posted by turtle777 

My point is: this regulation is absolutely unnecessary.

Let the banks determine their own criteria whom to give cards, and whom to decline.
If they lose money on the cards, they need to pay for it, and if necessary, go bankrupt.

Plenty of things in the realm of financial regulation are "unnecessary" but, on the whole, probably do more good than harm. I look at this under-21 regulation as akin to bank deposit requirements. Most banks are probably smart enough to keep "enough" cash on hand to deal with contingencies, even without a regulatory requirement to do so. Most credit card issuers are probably smart enough to make a "good" bet that a student's parents will bail them out of trouble, even if they aren't technically a co-signer. However, without systemic checks in place, there is a risk that the pursuit of self-interest on the part of the bank and the credit card issuer will lead to a liquidity crisis if there is some "black swan" event.

The only reason why the banks make bad business decisions is because the government keeps bailing them out.

That statement is just silly. Banks fail all the time. Usually it's only the depositors who are bailed out.

[ort888]

Look, you can say "Nanny State" all you want, but some form of government regulations on things like this are necessary. The debate is just on where we draw the line.

You might have no problem with credit card companies aggressively targeting unemployed college students to start them down a path of credit card dependence... but I'm not.

Do I like this bill, in theory, yes, but I don't really have all of the details. So I really don't know.

Are food labels a product of a nanny state? Safety regulations on cars? Truth in advertising laws? Where do you draw the line? Do we just give companies the freedom to do whatever the hell they want?

[turtle777]

Originally Posted by SpaceMonkey 

Plenty of things in the realm of financial regulation are "unnecessary" but, on the whole, probably do more good than harm. I look at this under-21 regulation as akin to bank deposit requirements. Most banks are probably smart enough to keep "enough" cash on hand to deal with contingencies, even without a regulatory requirement to do so. Most credit card issuers are probably smart enough to make a "good" bet that a student's parents will bail them out of trouble, even if they aren't technically a co-signer. However, without systemic checks in place, there is a risk that the pursuit of self-interest on the part of the bank and the credit card issuer will lead to a liquidity crisis if there is some "black swan" event.

I still don't see any reason for government action, other than trying to micromanage people's lives.

Originally Posted by SpaceMonkey 

That statement is just silly. Banks fail all the time. Usually it's only the depositors who are bailed out.

Uhm, yeah, the small ones are left to fail, because they don't have the lobbying power that the big banks (Citi, BoA...) have.

The big banks should have failed. If it wasn't for billions of tax payers money, they'd be dead.
So now they keep gambling with our money. Only fools believe that government regulation will keep them from making more risky bets and losing more tax payers money.

-t

[turtle777]

Originally Posted by ort888 

Look, you can say "Nanny State" all you want, but some form of government regulations on things like this are necessary. The debate is just on where we draw the line.

You might have no problem with credit card companies aggressively targeting unemployed college students to start them down a path of credit card dependence... but I'm not.

Why is this necessary ?
Why can't students learn to be responsible and make responsible choices, and if they don't, they end up in debt. Is that such a bad lesson ?

The proposed outcome is even worse: students DO NOT learn to make responsible choices, because the government tries to keep them clear of trouble.
Do you honestly think it will work ?
Do you really think that you can grow responsible citizens by trying to disallow failure and mistakes ?

-t

[ort888]

I thought that conservatives were trying to blame the current economic situation on poor people taking out too much credit?

Now we have a law that tries to regulate that and you don't like it?

Make a law that makes it easier for poor people to get credit = bad.
Make a law that makes it harder for for poor people to get credit = bad?

Huh?

And also, by your login we should be allowing 10 year olds to get credit card as long as Visa says it's okay. So once again, it's not really a choice between complete freedom for companies and a totalitarian nanny state... but rather on where we draw the line.

[sek929]

I don't see the problem here, if anything we'll keep Sally Dumbass from accruing 20 grand in credit card debt before she is 25.

I got a CC when I was 18, course I had been working full time since I was 12 so I actually knew what the meaning of money was. If this legislation keeps dumb college students who've never worked a day in their life from racking up more debt than is sensible than I'm all for it. People with decent income (like me) won't have to worry about it anyways.

[SpaceMonkey]

Originally Posted by turtle777 

Why is this necessary ?
Why can't students learn to be responsible and make responsible choices, and if they don't, they end up in debt. Is that such a bad lesson ?

The proposed outcome is even worse: students DO NOT learn to make responsible choices, because the government tries to keep them clear of trouble.
Do you honestly think it will work ?
Do you really think that you can grow responsible citizens by trying to disallow failure and mistakes ?

-t

This regulation is only about who can be issued a credit card without a co-signer. The cardholder can still make all of the mistakes he or she wants, but now their parents will be liable. It seems to me that creates an incentive for parents to be more interested in helping their child learn to make responsible choices.

[turtle777]

Originally Posted by ort888 

I thought that conservatives were trying to blame the current economic situation on poor people taking out too much credit?

Now we have a law that tries to regulate that and you don't like it?

Make a law that makes it easier for poor people to get credit = bad.
Make a law that makes it harder for for poor people to get credit = bad?

I don't know who these conservatives are.

I have said from the beginning: the problem is government intervention. It leads to many very bad unintended consequences, and screws everything up.

-t

[SpaceMonkey]

Originally Posted by turtle777 

I still don't see any reason for government action, other than trying to micromanage people's lives.

It's not about micromanaging private lives, it's about setting the boundaries of the playing field for financial institutions.

[OreoCookie]

Originally Posted by ctt1wbw 

I read them.... The rest of the stuff is what the UK Nanny State is up to at the moment. Like the goggles thing.

I don't know what the `goggles thing' is you're talking about, but why do you blame Obama for the law? (Just because you'd like to blame Obama for the law?) Aren't there much, much more important things going on at the moment (bail outs anyone?)?
It was passed with broad bipartisan support (357 : 70 votes in the House of Representatives and 90 : 5 votes in the Senate). Obama has signed it now (it's one of the duties of the President). If anything, it's a bad example for something Obama is responsible for. Unless, of course, you just want to string together things that have no causal relationship whatsoever.

[nonhuman]

Originally Posted by SpaceMonkey 

It's not about micromanaging private lives, it's about setting the boundaries of the playing field for financial institutions.

No, it really isn't. It's presented as a way to prevent evil corporations from preying on poor defenseless children, but it's not because that's not actually what happens. What happens is that some poor children are left defenseless but their absentee, or, even worse, overbearing, parents and so are unprepared to handle the responsibilities of adult life. They then make bad decisions and end up in undesirable situations. The government is now saying to those parents, 'it's ok, you don't have to actually parent your kids!', to the kids, 'it's ok, you don't have to be a responsible adult!'.

Just because a corporation makes a profit off your bad judgement doesn't mean the corporation is evil and predatory: it means you made a bad decision. This is the way all human interactions work.

[ort888]

Your assumption is that without any sort of government regulation companies would live and die on their own merits, and good morality would eventually be rewarded... But I think we would see a world where there are only one or two companies left and they would have unlimited power over every aspect of our lives. I think it would be very bad.

[SpaceMonkey]

Originally Posted by nonhuman 

No, it really isn't. It's presented as a way to prevent evil corporations from preying on poor defenseless children, but it's not because that's not actually what happens. What happens is that some poor children are left defenseless but their absentee, or, even worse, overbearing, parents and so are unprepared to handle the responsibilities of adult life. They then make bad decisions and end up in undesirable situations. The government is now saying to those parents, 'it's ok, you don't have to actually parent your kids!', to the kids, 'it's ok, you don't have to be a responsible adult!'.

Just because a corporation makes a profit off your bad judgement doesn't mean the corporation is evil and predatory: it means you made a bad decision. This is the way all human interactions work.

How is requiring a co-signer (in most cases a parent) relieving parents of responsibility? It's exactly the opposite.

[turtle777]

Originally Posted by ort888 

Your assumption is that without any sort of government regulation companies would live and die on their own merits, and good morality would eventually be rewarded... But I think we would see a world where there are only one or two companies left and they would have unlimited power over every aspect of our lives. I think it would be very bad.

Well, could we *really* try it [w/o government regulation] first, before we completely dismiss it ?

-t

[ort888]

http://www.kentlaw.edu/ilhs/earlyday.htm

I have a feeling it would end up like this in a matter of decades.

[nonhuman]

Originally Posted by SpaceMonkey 

How is requiring a co-signer (in most cases a parent) relieving parents of responsibility? It's exactly the opposite.

It's relieving the parents of the responsibility of making choices about how to raise (or not) their children (if you can call them that at up to 21). Responsibility isn't just about doing the responsible thing, it's about choosing to do the responsible thing.

[SpaceMonkey]

Originally Posted by nonhuman 

It's relieving the parents of the responsibility of making choices about how to raise (or not) their children (if you can call them that at up to 21). Responsibility isn't just about doing the responsible thing, it's about choosing to do the responsible thing.

The parents now have a more explicit interest in their still-financially-dependent offspring. I really don't see at all how this could be construed as relieving their responsibility of "making choices about how to raise (or not) their children." How they raise their children is still up to them. They and their children still face the consequences of their own actions.

[andi*pandi]

I am merely surprised this law wasn't already on the books. I needed a co-signer for my first credit card. And til I was 21, pretty sure the cards I had were limited to the outrageous sum of $800.

The only person who would complain about this is some kid who doesn't want a card under mom and dad's account since then mum and dad would see the actual bill. Much easier to phone up mum and dad and say, send me $800 this month, I had to buy books... <cough>

[nonhuman]

Originally Posted by andi*pandi 

The only person who would complain about this is some kid who doesn't want a card under mom and dad's account since then mum and dad would see the actual bill. Much easier to phone up mum and dad and say, send me $800 this month, I had to buy books... <cough>

Or the parents who have spent 18+ years paying for their kid and now want to see them display some independence and responsibility without a safety net and without being deprived the very real utility of a credit card.

[SpaceMonkey]

Originally Posted by nonhuman 

Or the parents who have spent 18+ years paying for their kid and now want to see them display some independence and responsibility without a safety net and without being deprived the very real utility of a credit card.

Then they should suggest that he or she get a job.