Rich Tucker

Shortly after Barack Obama rammed his health care “reform” bill through Congress on a strictly partisan vote, the great Wall Street Journal columnist Holman Jenkins observed that the president had obtained a political victory.

“Now, can we have health-care reform?” Jenkins wondered. He noted that free-market principles, which would force providers to compete on price, could drive down consumer costs. Instead, the country will get stuck with Obamacare’s changes, which will only increase costs.

Well, here we go again.

Lawmakers, spooked by the 2008 financial crisis, have passed a massive “reform” bill that’s supposed to protect Americans. Obama says he’ll be proud to sign the measure. It would “put in place the toughest consumer financial protections in our history, while creating an independent agency to enforce them,” he insists.

For example?

“Credit card companies will no longer be able to mislead you with pages and pages of fine print,” Obama said. “You will no longer be subject to all kinds of hidden fees and penalties, or the predatory practices of unscrupulous lenders.”

Sounds okay, as far as it goes. But wait -- was the 2008 crisis caused by credit card companies bilking consumers? Not at all. It was triggered by a recession and the eventual collapse in prices when the national housing bubble burst.

With millions of “homeowners” defaulting because they couldn’t make their mortgage payments, banks were left with empty homes whose true value was a mystery. They eventually started to hoard assets so they wouldn’t be swept into bankruptcy as, say, mortgage broker Countrywide was.

In other words, the crisis had everything do to with credit, and nothing to do with credit cards. Oh, and by the way, it was federal government policy to encourage lending to people with less than stellar credit histories. Fannie Mae and Freddie Mac were explicitly supposed to back such loans, in order to encourage more home ownership.

Still, the administration doesn’t like to let a crisis go to waste, and seems eager to get a new regulator in place. That nominee will head the Consumer Financial Protection Bureau (created by the recently-passed legislation), and is expected to be Harvard law professor Elizabeth Warren.

“The market for consumer credit is broken,” she says. “Credit card agreements, mortgages, bank overdraft agreements and other products are loaded with tricks and traps.” Again -- that may be true. But it’s not really relevant to the problem our government is supposedly addressing.

Rich Tucker

Rich Tucker is a communications professional and a columnist for