The FICO weightings for credit card debt have been known for a long time, nothing new here. Not only that, banks issuing credit cards have a long, long history of screwing their existing customers, good and bad, every time a recession comes through town. Again, nothing new.
Banks had already started to lower credit lines and become more aggressive in other ways well in advance of any legislation. The legislation is in response to their actions, not the other way around. The only bad thing is that the legislation doesn't take affect much sooner.
Consumer spending became a popular slogan for government preaching we must spend to grow our way out of the last recession. It was not only encouraged, but we were told if we spent we were also being patriotic. That was several years ago, when many fiscal conservatives were wondering when the assets bubble would burst. Having super low interest rates, higher and higher leverage, is not a good thing.
The asset bubble, especially the credit bubble on inflated assets, began in earnest in 2000/2001. At that time, many people shifted money into real estate, and the cash out refis began. As homes went further up and rates went even lower, the refis accelerated. Consumer spending, and the refis, became the fuel for a phony cycle of "growth". It was actually enormous consumer debt that was increasing as assets became inflated. The counter side was the banks being allowed to over leverage. Three of four banks/investment firms that received a special allowance to leverage even further, have since vanished. While the ground work was laid in 2001/2002, Most of the real damage was done in the period from 2004 through 2006.
The only ones that aren't po'd by all of this now, are the ones that continued to save and didn't buy into the phony ownership society. Those that did, now know (or should know), that on a net basis, they didn't own anything. The credit card banks are just doing today what they've always done, if allowed to.
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