The credit card industry has really been running wild lately. After a frenzy of acquisitions and consolidation in the last several decades, only a few major banks issue the vast majority of credit cards in the United States, and the industry has been able to get more and more Americans to take out heavier and heavier debt loads. Today, America’s credit card debt load is approaching one trillion dollars (with millions of families having ten or more cards and more than $10,000 in outstanding debts), and the industry has continually raised both interest rates and punitive late fees, over-limit fees, etc. The industry’s profits have jumped 30% more since Congress adopted the "Bankruptcy Reform Act" three years ago that makes it harder for consumers who have fallen on hard times (very often due to medical debts stemming from an illness) to get a new start and become freed from their credit card debts.

As millions of Americans know all too well, the credit card industry has jacked up its profits through a wide variety of ugly, deceptive shenanigans. People sign up for cards because of low "teaser" rates, which are nearly always rapidly raised afterwards without any real justification; cards are heavily marketed to people (such as kids just arriving at college) who predictably are going to fall deeply into debt; games are played with when payments are considered "received" so that unfair late fees can be charged; and consumers are gouged in a host of similar ways.

These abuses have thrived because no one has been protecting consumers. The federal regulatory agencies have largely viewed their role almost exclusively in terms of protecting the profit margins of the credit card issuing banks (the agencies euphemistically prefer to call this focus the protection of the banks’ "safety and soundness"), and have fought jealously to block state regulators from doing anything to protect consumers.

Consumers have only rarely been able to get relief through consumer protection lawsuits, because too many courts have permitted banks to hide even the most egregious, deceptive and predatory practices behind the twin shields of (a) mandatory arbitration clauses that ban class actions and funnel cases into an industry-friendly arbitration company that nearly always rules for the banks; and (b) sweeping federal "preemption" of state laws that might protect consumers.

Finally, the Federal Reserve has taken notice, and has proposed rules that would outlaw a few of the most egregious abuses by credit card companies. Until detailed regulations are issued, the meaningfulness of these reforms is yet to be seen (federal agencies often engage in their own version of "bait and switch" by making vague promises to end abuses but then drafting rules whose fine print lets the cheating continue). But one thing is clear – the reforms will only apply prospectively, at best. Because the civil justice system has been so crippled with respect to credit card issuers, nearly all of the money already taken from consumers through deceptive and sharp practices will remain in the companies’ pockets.

The Fed wants the headline to be "Fed Solves Consumers’ Problems." The real headline is a little different: "Fed Promises to Finally Start Taking the First Halting Steps to Slow Down Consumer Rip Offs; Nation Waits to See If Promise Will Actually Be Kept."