WASHINGTON — A study sponsored by the American Banker's Association advised against changing credit card regulation of card interest rates and fees, arguing that doing so would hurt the ability of people with lower credit scores to access credit.

The two economists who authored the study, Jonathan Orszag and Susan Manning, both of the consulting firm Competition Policy Associates, Inc., argued that recent proposals to regulate the credit card industry by imposing caps or other constraints on fees and interest rates would yield far more harm than benefits–a concern borne out by historical and international experience.

"Imposing rate or fee regulations is the functional equivalent of squeezing a balloon," explained Orszag. "The air–that is, interest rates and fees–is just shifted from one side of the balloon to the other–that is, from higher risk card holders to lower risk ones." In addition, Orszag explained, "Legislative restrictions on the interest rates and fees that bank issuers can charge would reduce the availability of credit for many higher-risk and lower-income borrowers."

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