Fox Business hosts Stuart Varney and Elizabeth MacDonald recently highlighted a report from the New York Federal Reserve which detailed an upswing in credit card rejection rates and involuntary account closures, calling the report “bad news for the economy,” but failed to mention the Trump administration’s systematic effort to dismantle consumer protections around credit.
Since President Donald Trump took office in January 2017, the administration has engaged in an ongoing and methodical effort, through the gutting of the Consumer Financial Protection Bureau (CFPB), to scale back regulatory oversight of financial institutions, including credit card companies. That effort includes, for example, the rollback of a CFPB regulation “that would have made it easier for credit card and bank account users to sue companies for issues like overcharging,” as “most consumers would find it too expensive to pursue grievances against financial firms in court.”
Even though objective observers note that the report “most likely signals that card companies issued debt too freely and to less-trustworthy borrowers,” MacDonald wrote the report off as “another weird kind of non sequitur of a thing popping out in the data.” From the December 6 edition of Fox Business’ Varney & Co.:
STUART VARNEY (HOST): A red flag on the economy, maybe another one, what's going on with credit cards, Liz? Now's your chance.
ELIZABETH MACDONALD (FOX BUSINESS HOST): So, yeah, sorry, forgive me, I was working another story. We're going to tell you about that in a second. Rejection rates for card applicants came in very high, according to the New York Fed. Also, involuntary bank account closures because of problems with credit card payments, also at five-year highs. So, are lenders bracing for -- another negative for the economy, is it that the lenders are bracing for a slowdown? I mean, interest rates are relatively low, so, for this to be happening, another weird kind of non sequitur of a thing popping out in the data.
VARNEY: But the credit card stuff is bad news for the economy.
MACDONALD: Yeah, the credit card thing, it's bad news. People not paying their cards, and they're getting their bank accounts shut down.
VARNEY: That hurts.