Regulations can work, credit card edition

Via here, it seems that the CARD Act has done a pretty good job:

We analyze the effectiveness of consumer financial regulation by considering the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act. We use a panel data set covering 160 million credit card accounts and a difference-in-differences research design that compares changes in outcomes over time for consumer credit cards, which were subject to the regulations, to changes for small business credit cards, which the law did not cover. We estimate that regulatory limits on credit card fees reduced overall borrowing costs by an annualized 1.6% of average daily balances, with a decline of more than 5.3% for consumers with FICO scores below 660. We find no evidence of an offsetting increase in interest charges or a reduction in the volume of credit. Taken together, we estimate that the CARD Act saved consumers $11.9 billion per year.

You can see an interview with one of the authors here which is an add-on to this article.

Don’t tell any of the conservatives who think government regulation is such a bad thing (although I should not that this was a strongly bipartisan bill–it passed 357-70 in the House and 90-5 in the Senate).

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