If you thought credit card companies were bad before, you ain't seen nothing compared to the abuses to come as a result of the new Credit Card Reform Act. According to industry representatives, the new regime will force credit card companies to come after prime borrowers, restrict access for the young and non-prime, do away with rewards programs, and up annual fees. In short, they're going have to raise hell until lawmakers repent.

Following the passage of the new legislation, commentators of all stripes weighed in on the topic. Consumer groups and some on the left praised the law as a definitive win in the on-going struggle between ‘Wall Street and main street'. The plastic card industry and some on the right decried the measure as ‘anti-competitive' and an affront to the concept of personal responsibility.

Although the competing parties agree on little, the commotion surrounding the new legislation suggests that one point is not a matter of contention: the consumer credit industry is about to undergo dramatic changes.

Unfortunately, this, the one point of agreement, is where the real debate should occur. I'm here to tell you that this is a bluff both legislators and individuals should call.

Think about it: the changes proposed by the credit card industry are a model for self-destruction. On the one hand, they say they are going to stop issuing cards to the poor and the young (and especially the poor and young). These are the people least likely to pay off the full balance in time, and thus, the people most likely to generate profit margins.

To make up the lost revenue, credit card lenders are also proposing to squeeze the prime borrowers who, in the words of one industry watcher quoted in the New York Times, have been "making out like bandits". Unfortunately, these are the very people that don't need credit cards. Start raising rates and charging annual fees and these people will be cutting plastic faster than an environmentalist at the six-pack ring factory. Rich people will go from three cards to one, or none, faster than you can say Djibouti.

Give it six months to a year, and we'll end up with a credit card market completely oversaturated by lenders. I don't think it will even get that far, but if it does, it won't stay like that for long. Eventually, the credit card lenders are going to have to make some money, even if it's in a less usurious fashion than before. To the extent competition exists at all anymore, one card will undercut the rest, and eventually everybody will have to follow suit. How do you think things like rewards programs developed in the first place?

In the end, we'll be back to where we started, albeit with slightly less sneaky tactics. So I guess the whole point of this blog was to say that all the fuss over the Credit Card Reform Act was about nothing. (Ironic? Yes.)