Scuse me but from all the talk here about divorcing dads having to pay x-wifes credit card bills... you would think this would be considered a good thing..

Yeah I get personal freedom is important.. I hate having to constantly tell some body no when I am checking out.. I have no credit cards and don't want any..

Well craptastic-I've never had a problem getting any credit-car loan etc-with household income. I'm not sure how this is going to work in Texas, because legally my spouses income is mine here, and vice versa. Hopefully, that won't change, although I should be out of school and working in 3 years now.

there goes the retail sector!

It would be a good thing for men/husbands, which is why it will be repealed.

Paying your debts is admirable especially in college, but conssidering that the average student is generating $40,000 debt it is that debt that we should be looking at not the 2-3,000 they will have on their cards.
Most seriousl need a wake up call that going to college is not a right and that their degree should pay for itself. I think the best way to handle this would be to have student loan officers work like buisness loan officers. And have a bad loan actually financilly hurt the loan originator (unfortunately in the finance world that rarely happens) If you want me to loan you the money you have to prove to me that you will actually pay it back.
I can just see the conversation now.
Student: "I'd like a student loan?"
Loan Officer: " Sure where? how much? what major? and let me see your HS grades?"
Student:" Oberlin, $200,000, art, grades, well I have a D average but I got a B in art."
"Why are you laughing?"

So a corporation is considered a legal person, but a married couple can not use their joint income on a loan application?

This sense makes not.

Two thoughts on this:

The recent financial crisis clearly showed that neither consumers nor the institutions that offer them credit make good decisions about the use of and extension of credit. Post-bailout, the U.S. taxpayers are an explicit backstop to these bad decisions, particularly at the institutional level; given that, it seems sensible policy to make it harder students and others without income to get themselves into significant consumer debt.

I also wonder whether the new bill actually changes things much with respect to stay at home moms. When my parents divorced, it took several years for my mom to build her credit, even though she was the one in the family who kept the books and made sure everything was paid on time. From creditors' perspective, she had a limited income history and my dad's earnings paid the bills; her contributions didn't show up in the relevant financial statements. While one can argue this was unfair, it wasn't crazy from a business perspective. I don't see how the present state of things differs much.

First, the government tells banks they must lend money to people with no ability to pay the money back.

Then, the economy tanks. Small wonder.

Now, the government is telling banks they can't lend money to people who actually have the ability to pay it back.

Screw it. I gonna go pound a few Four Lokos and forget about it. The FDA did what? Crap.

I personally think it is a very good idea that people who have little or no income on their own can't qualify for credit instantly. The reason these retain chains hate it. is because women are IMPULSE shoppers for shoes and clothes. No one should have the right to make someone else responsible for stuff they charge without them signing something saying that they can. If instant gratification can't operate here, so much the better. Maybe they will learn some self discipline.

First, the government tells banks they must lend money to people with no ability to pay the money back.

I assume you're referring to the CRA with this? If that's the case, and you've done your reading, then you must know that CRA loans are a tiny fraction of the mortgage market, and that they do not default at particularly high rates.

The real problem loans were not CRA loans, and many of them came not from banks but from mortgage originators not subject to that regulation. Concisely, the real problem with the mortgage market was the originators were able to easily securitize bad loans, which ratings agencies blessed as AAA bonds, which investment banks sold to hungry institutional investors who were delighted to see AAA securities with great returns and (apparently) low risk. These institutional investors never looked beyond the ratings to see what was in the bonds, and therefore failed to recognize that the mortgages backed the bonds were of low quality and highly correlated, and therefore likely to default, and to do so together.

Should we also deny credit to people who have inherited wealth? They have "little or no income on their own."

Not true. They usually work, and they certainly have investment incomes and assets in their own names.

Also, doesn't this mean that stay-at-home mothers who get divorced will have no credit history?

That's how the creditors treated my mom for the first year or two following the divorce.

However, I don't read this as saying they can't get credit, just that it's harder, and they'll get less credit, unless they and their husbands are both on the credit applications. By and large, the earning potential of stay at home moms is an unknown from the perspective of creditors, and usually significantly lower than that of their husbands. If they're applying as single individuals rather than as a couple, this should be considered.

Credit should not be easy to get, it should need a justification other than, "I want to shop." however I must reluctantly agree that the government has little business in this matter beyond prohibiting predatory and deceptive practices in lending.

Apart from the business aspects of this, I find the inadvertent social statement the government is making distasteful: that married people who have determined that one partner stays home and one partner is employed are unequal players in their partnership, and that SAHMs abd SAHDs are subordinate to their spouses.

legally my spouses income is mine here, and vice versa.

This is exactly how it should work.

Those BASTARDS! I say we all get even with them for this crap by not borrowing anymore! Let's just wait until we can afford stuff, and pay with friggin cash!

That'll learn 'em! :) :)

Amy: My bill probably came to around $28 a month, when I even used it.
_______________________

"Even used it"? You're lucky they didn't shut you down. Assuming they didn't. Nowadays, one has to use it at least once every two months, if not more often.

And the way things are going, I wouldn't be surprised if they start penalizing you for not paying your bill before you even get it.

momof4,

I have to admit my idiocy in public here... I just figured out what your handle "momof4" stands for....

Love your blog Amy, you've assembled some powerful minds here, there are a lot of critical thinkers on both sides of the arguments, that's refreshing. Lots of people read these blogs and I *hope the people I'm talking about don't read this part* but for the many people who "don't think on their own" it is good for them to "observe" public forum discussions where it is OK to have differing views, discuss them and avoid loss of rationality. And that everything is not black and white, There positions and opinions on things that are neither "Left" or "Right", that may have some merit.

At most points in the history of the world, this has been punishable by death.

^5

As Underdog occasionally said, "Never a borrower nor lender be". There are way too many slime-slurping, scum-skimming, silt-sifting, bottom-browsing, Monongahela-mud-munchers trying to shake us all down. Just give me an abandoned Airstream trailer on the high desert of New Mexico, therein to dwell while dining upon barbecued iguana and staring at the brilliant stars.

This somehow reminds me of way back in the day, maybe the late 80s, when I was in high school. My mom had a young coworker, a couple years out of high school, who opened a checking account for the first time. They gave her that little pack of 10 or so starter checks, and she promptly went out and used them.

A couple of weeks later, she was visibly upset and my mom asked her what was wrong. The bank had shut down her account, and she was really steamed about it.

Why had they shut down her account? Well, she'd opened the account with $500, then proceeded to write checks for about $5,000. When my mom figured this out, she said "so you're overdrawn for thousands of dollars?" The woman's response was something along the lines of "no, they haven't even sent me the first bill!"

I stopped using credit cards about 10 years ago. Completely. I paid cash for my cars. I have money in the bank. I save up for large expenditures and it really, REALLY cuts down on impulse shopping. The only debt we have is the mortgage, and I pay extra each month towards the principle. Credit cards are evil.

^^^omg, omg, omg! Just last week, a brick of Joyva halvah (marble, my favorite) levitated from its grocery store shelf and shanghai'd me! I feel so cheap!

"Credit cards are evil."

No- credit cards are a tool. If you use them responsibly, they present no risk. As already noted above, my credit card provides me with a free plane ticket every year or so, just for using it to pay for things I would have bought anyway with cash or a check. I don't use mine for anything I'm not absolutely sure I can pay for at the end of the month.

"Apart from the business aspects of this, I find the inadvertent social statement the government is making distasteful: that married people who have determined that one partner stays home and one partner is employed are unequal players in their partnership, and that SAHMs abd SAHDs are subordinate to their spouses.

legally my spouses income is mine here, and vice versa.

This is exactly how it should work. "

So in other words, you two want to have it both ways. You are perfectly happy that the government has a law making one spouse responsible for the others debts, but you get all bent out of shape when the government passes a law saying that there has to be some kind of notification or cosigning before one party can assume a debt that the other one has the responsibility to pay.
In the end, this is just another issue the demonstrates why we need to end marriage in the US as it currently exists and go to domestic partnerships where everyone's rights and responsibilities are clearly defined, and individually tailored to the situation. Studies have been done that indicate that financial issues break up more relationships than cheating or drug habits. I seen some spendaholics of both sexes that have at least as serious a problem as any drug addict. The law should protect the innocent party and not enable the behavior.

I wrote "I seen some spendaholics of both sexes that have at least as serious a problem as any drug addict."A

Amy replied "We don't make wine illegal because some people are drunks -- although we did, because we're dim."

My reply. Poor analogy. No one is making credit illegal. All this does is make your qualify for it based on your own finances. A good analogy would be if you were an alcoholic and this new law said that your spouse no longer had to provide you a credit card with which you could buy as much booze as you saw fit. .

Amy wrote "How finances play out in a marriage -- that's for people in marriages to deal with, not the government." Yes, it would be, but my point was the government, both state and federal have already tilted the playing field making a spouse legally responsible for the other's debts. If they had not have done this to begin with, a sane business would not give credit to someone with no money or credit history of their own. All this new law does is take back some of that ill advised social policy that shifted personal responsibility for debt to an innocent and uninformed party. Let's test this idea to the limits. Do you think either a husband or wife should be able to take out a loan for a house or a car without the signature or consent of the other party? If not, why not? How about emptying out a jointly held 401k with both their names on it even though all of the contributions were made by the other party?

I would be far more comfortable going along with the notion that businesses should be able to assume whatever level of risk they desire if they actually dealt with the consequences of that risky behavior.

As it stands, recent history suggests when large businesses take large financial risks and they end up losing they immediately approach the government in order to divest themselves of the loss.

So far as I am concerned, the moment a business is deemed too big to fail and hence requires a bail out from the government (and by proxy the tax payer) for risky behavior is the same moment that they willingly open themselves up to draconian regulation by that same body.

If these businesses want to be independent enough to make any decision they like, then they should be independent enough to fall flat on their face if they make the wrong decisions.

Back when I was teaching math at a Catholic school for poor urban youth...

Somehow the girls started talking about whether or not they believed in God. One girl said yes, because one Christmas they had no money for presents. So her mother prayed, and the next day, there was a credit card in the mail!

I tried to explain the importance of paying them back, but I'm not sure they were ready to grasp compound interest... that was for the 8th graders and they were in 7th...

I would say something but it's pretty much all been said:

"Scuse me but from all the talk here about divorcing dads having to pay x-wifes credit card bills... you would think this would be considered a good thing.."

"In the end, this is just another issue the demonstrates why we need to end marriage in the US as it currently exists and go to domestic partnerships where everyone's rights and responsibilities are clearly defined, and individually tailored to the situation."

"Considering that the average student is generating $40,000 debt it is that debt that we should be looking at not the 2-3,000 they will have on their cards. Most seriously need a wake up call that going to college is not a right and that their degree should pay for itself."