Friday, December 31, 2010

Citigroup (NYSE:C), Home Depot (NYSE:HD), Limited (NYSE:LTD), Oppose Credit Card Plan

The usual unitended consequences of government interference in the market place has emerged with the signing into law of the Credit Card Act. Companies like Citigroup (NYSE:C), Home Depot (NYSE:HD) and Limited Brands (NYSE:LTD), among others, oppose the regulation which was recently amended.

Originally meant to protect college students, it now will have a significant impact on stay-at-home moms.

The problem centers around the requirement that credit-card issuers can only make a decision based on the independent income of the borrower, instead of the overall household income.

Citigroup opposed the measure because it issues store cards to Home Depot and other retail outlets, and would have a significant impact on their revenue.

Citigroup's deputy general counsel Carl Howard said, "The proposed amendments regarding use of household income are not warranted, will harm consumers, and should not be adopted."

The initiative was actually added to the original regulation after it was put in place.

The Federal Reserve is soliciting comments on the issue until Monday, January 3.

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