by Ronald J. Mann
PUBLISHER: Cambridge University Press
ISBN: 0521866111
PRICE: $65.00
PAGES: 250 pp
PUBLICATION DATE: September 2006

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Charging Ahead

What Can We Do?

Charging Ahead examines a comprehensive menu of regulatory approaches for responding to the challenges of card regulation.

Charging Ahead is aimed at the cautious policymaker, interested in the past responses of regulators around the world. It emphasizes at every point careful analysis of how different regulatory schemes are likely to affect economic activity at large. A crucial feature is thoughtful consideration of existing approaches, many of which have not had constructive effects:

• Why the recent Australian and UK experiments in interchange regulation (that is, lowering the fees merchants pay when they accept cards) are a wrong turn that we should not follow
• Why rules permitting credit card merchants to impose credit card surcharges are likely to be an incomplete and ineffective response
• Why existing disclosure rules do more harm than good
• Why interest rate caps will not work

But the book is also emphatically constructive, providing an ambitious set of proposed reforms:

• The case for standardizing the terms of cardholder agreements
• The case for prohibiting marketing directed at minors and college students
• How to reform disclosure regulation to emphasize the points of consumer choice (at the retail counter and when paying the monthly bill) rather than the point of consumer apathy (initial receipt of the card).
• The case for banning affinity and rewards cards
• The case for banning teaser rates
• How mandatory minimum payment requirements will help consumers
• Why a tax that issuers pay on the amount of “bad” credit card debt they hold will lead to less lending to those in distress

No regulator will want to follow all of the advice offered in this book. But no policymaker that wants to understand the possibilities of regulatory reform of a complex business that is so integral to everything that is good and bad about our peculiar society can afford not to read it.