This is the Cato Daily Podcast for Monday, March 1st, 2010. I'm Caleb Brown. Financial

regulatory reform is in the pipeline and new credit card regulations have just gone into effect.

Our Collaboria Director of Financial Regulations Studies of the Cato Institute looks at the motivation,

content, and consequences of these reform efforts.

Well, we're seeing a variety of changes driven both by legislation that was signed by the President in May, and which is only now going into effect

in terms of being implemented by the Federal Reserve. But we're also seeing

changes from the credit card industry on one hand reacting to legislation but also reacting to changes in the

marketplace. I am sure I am not alone in noticing a significant drop-off in the number of

credit card offers I get mailed and that happens to be happening to all of us.

Part of this is a pull back to reflect increasing credit risk because of the economy, but

also part of this is to reflect what the

lack of ability now that the credit card companies have to price risk under the

new legislation. So the diversity of rates is going to shrink or just shift upward in general.

Both.

You're going to see an upward shift.

I mean, we've already seen over the last year or so almost two percentage point increase in what average credit card rates are and

that's compared to when we've seen overall rates and the economy come down.

So there's been a re-price of risk. There's also a degree to which many of the changes of the law lengthen

the amount of time that credit card companies have to go through.

For instance, even if a credit card company wanted to raise your rates under the new law, it now has to tell you

45 days in advance.

So you've lengthened that cycle and you know there's a lot you could do in 45 days.

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