Last year, with much fanfare, we were told that new financial regulations would make it harder for credit card companies to suck in innocent college students with their malicious wares. This year, as the regulations actually go into effect, we're finding out that this has had an unwanted side effect. It turns out that college students aren't the only ones with high household incomes, but low personal earnings. Stay-at-home Moms also fit that description, and from now on, they're going to have a hell of a tough time getting credit in their own name:
Dress Barn Inc., Home Depot Inc., Citigroup Inc. and other companies are urging the Federal Reserve to drop a proposed rule that would require credit-card issuers to consider only a borrower's "independent" income rather than household income. The new standard, which would apply to new credit-card accounts and requests to increase limits on existing accounts, could make it difficult for some customers to get credit on the spot, especially stay-at-home moms.
Anne Fortney, a lawyer at Hudson Cook LLP in Washington, said the Fed proposal would be a setback for women's rights.
"It is astonishing that people have forgotten how difficult it was 40 years ago, particularly for women, to establish credit," said Ms. Fortney, who represents banks and retailers on consumer-finance issues. "This would really take a lot of women back to where they were in the early 1970s."
In fact, if the rules are strictly applied, they're going to impact a lot more than just stay-at-home Moms. Most women still earn less than their husbands, meaning that they're going to end up with less ability to secure credit in their own name than their husbands have. That translates into less economic power to, say, open a business using her credit, or leave a bad marriage, because you might not be able to get a mortgage on your own with only a limited credit history. Presumably, more women are going to end up as joint-account holders with their husbands, rather than limiting themselves to the piddly amount of credit they can secure under their own names.