When President Obama lobbied for the Financial Reform bill cobbled together by Senator Chris Dodd and Congressman Barney Frank, he could have easily repeated what Nancy Pelosi said about Health Care Reform – let’s pass it so we can find out what’s in it. I couldn’t find a synopsis of the bill prior to its passage, but I’m now shocked to discover that this is a mammoth extension of the nanny state.
Getting your first credit card has always been a rite of passage for college students. Even though credit card companies have recently tightened their requirements, a smart student with the help of a cooperative parent could still obtain a card in his or her own name. This helped the student establish an independent financial life after graduation.
I helped both of my college-age children acquire their first credit card by working with a regional bank located near my home. I had to convince them to give one to my son, although they insisted that we use his Certificate of Deposit (CD) to secure the card. By the time my daughter came of age, they just acquiesced and issued her one without security. Recently we tried to redeem my son’s CD, but we were told that this would void the credit card. If my son wanted an unsecured card, the bank now required him to submit a financial statement along with recent pay stubs. We asked why this was necessary; after all, he had used the card responsibly for two years and had made all the payments in full and on time. The bank replied that they had no leeway because of the new Financial Reform act. Since many college students – if they work at all – don’t consistently earn enough money to obtain a credit card under the new rules, very few of them will be able to establish their own credit. But most kids attending an out-of-town school today need a credit card, even if it’s just to avoid carrying around lots of cash. Yet instead of establishing these young adults as independent beings, the new regulations will force them to continue using an associate card from their parents. Even when they get their first post-college job, they will still be tethered to their parents for a period of up to six months while they are building work history.