Mom can have her own credit card!

October 18, 2012 at 6:48 am 1 comment

The CFPB yesterday proposed regulations intended to make it easier for lenders to qualify stay-at-home spouses for credit cards.  Specifically, the Bureau is proposing to amend regulations and accompanying commentary under the CARD Act to clarify that lenders can take into account household income that a spouse reasonably has access to in assessing an individual’s ability to make payments when applying for a credit card.

As you may recall from a previous blog, the CARD Act requires lenders to take into consideration a credit card applicant’s ability to pay before approving a credit card.  In promulgating regulations under this provision, the Federal Reserve explained that an individual’s independent income could only be considered for purposes of underwriting a credit card request.  This got Moms and Congressmen all over America more fired up than President Obama in his second Presidential debate by making it more difficult for a stay-at-home mom, or dad for that matter, to be qualified to be eligible for a credit card.  The CFPB took an extremely cautious approach to analyzing the issue and yesterday announced proposed regulations that strike a middle ground.  Instead of simply authorizing the use of household income, it is proposing that lenders be allowed to consider income that an applicant reasonably can expect access to such as a spouse’s salary that is placed in a joint account.  The CFPB is clearly sympathetic to the argument that there has to be stronger underwriting standards for credit cards, but is also mindful of the practical impact of making it more difficult for Moms to get credit cards without help from “the man of the house.”

In commenting on the proposal, I am curious if credit unions see this as a reasonable compromise or the type of nuanced distinction attractive to lawyers but operationally burdensome.

By the way, happy International Credit Union Day!

Entry filed under: Compliance, Regulatory. Tags: , , .

A.C.L.U. v. Investment Banks New York, New York

1 Comment Add your own

  • 1. Bill  |  October 22, 2012 at 9:25 am

    Has the CFPB forgotten already the mortgage debacle. Credit cards are risky enough without having lenders rely on some phantom income we would have no legal recourse to go after if the stay-at-home defaulted. I am quite sure we are not going to build our portfolio this way. I think the divorce rate in tthis country is around 50% Good intentions seem to fade away when the *!#@ hits the fan and the couple join the 50%( maybe its 47% )

    Reply

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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