Ah, the one-source story.
Nasty habit of Bloomberg and the Financial Times—and now Fortune.
The magazine interviews Wall Street analyst Meredith Whitney, who warned early about Wall Street’s looming disaster, and who’s now getting into the contrarian business on consumers.
Here’s the headline:
Meredith Whitney: Obama credit card reform makes it “More expensive to be poor”
Now, you might expect such a black-is-white assertion to encounter a little pushback somewhere in the story, but you’d be wrong. Here’s the logic, if you can call it that:
For example the rule that credit card companies must give customers a 60-day warning before raising interest rates has caused particular consternation among lenders. If banks can’t instantly raise rates on the customers their computers say are more likely to default, they simply stop lending en masse.
“What I worry about, despite all these noble intentions, is what these policies are doing is actually pushing down the middle class into a really unfortunate position,” she says, “where it gets a lot more expensive to be poor…
Second, people cut out of the banking system who can’t get by without credit will turn to small financial shops, including predatory lenders, and likely pay heavy fees and interest rates.
Let me get this straight: Credit-card reform prevents credit cards from putting the screws to consumers in certain egregious ways, like, oh, jacking up APRs on past balances without recourse, but this is bad because the poor will have less access to credit from companies that put the screws to them?
Of course, the banks were severely dialing back credit before any reforms were put into place. And you might suspect that Whitney would call for regulating these predatory lenders, too, but she doesn’t. And Fortune doesn’t call her on it.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.