The Consumer Financial Protection Bureau is proposing changes to a clause in the CARD Act that makes it all but impossible for stay-at-home spouses to apply for credit.
“We will need to engage in rule-making. We have made a determination to proceed,” director Richard Cordray said at a hearing of the House Financial Services Committee.
Businessweek reports the bureau spent months looking into the credit card industry and “concluded a regulation—rather than a clarification or change to the law” was needed.
As BI’s Mandi Woodruff has reported, “the clause was supposed to prevent college-aged students from taking out lines of credit based on their parents’ income, but basically elbowed stay-at-home parents out of the credit game altogether.”
Homemakers were required to report income even when they had none, so they were “effectively denied credit before they even applied.” Cordray noted that “tens if not hundreds of thousands” were impacted by the rule, especially women who are 30 times more likely than men to stay at home.
Holly McCall, the stay-at-mother of two who famously launched a petition on Change.org against the rule in April, was inspired by the news.
“”Stay-at-home mums shouldn’t have to ask their husbands for permission to get a credit card, and I’m glad to hear Director Cordray agrees,” she said. “It’s so heartening to see a big government agency like that respond directly to the voices of consumers across the country.”
John Ulzheimer, credit expert and president of SmartCredit.com, said he agreed.
“Those lawmakers who were anchored to the individual income requirement were out of touch with the reality of how most household economies operate,” he said in an email. “Removing the individual income requirements is a common sense alternative to the CARD’s punitive individual income requirements.”
The proposed regulations are expected to go into effect after this year’s election and would impact major credit issuers like Chase, Bank of America and Capital One.
Business Insider Emails & Alerts
Site highlights each day to your inbox.