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Jane Ahlin, Published December 10 2011

Ahlin: Stay-at-home spouse rule on credit cards outrageous

While checking Facebook, a story copied from MomsRising.org catches my eye. The story is about credit, more specifically a Federal Reserve ruling about credit card companies and cardholders. The heart of the ruling is that stay-at-home spouses no longer will be able to open credit card accounts in their own names on the strength of household earnings. Unless that stay-at-home wife or husband can show sufficient individual earnings, neither he nor she will qualify for a credit card or be able to build a credit history or credit score.

Oh, wait … the stay-at-home wife or husband can ask the working-outside-the-home spouse for permission, and if that spouse grants it, the one at home can get a credit card. (Note: The spouse with a paycheck doesn’t need permission from anybody.)

Good grief. Talk about echoes from the past. Suddenly, I’m back in the early 1970s, and my husband and I are newly married. He’s in school, and I’m working. I apply for a credit card, and the card comes … in my husband’s name. Of course, before the Equal Credit Opportunity Act of 1974, that’s the way it was. Back then, gender discrimination was the social norm, and the married man was the head of the family even if he didn’t have a job.

Who knew that 40 years later the Federal Reserve would rework that old-style inequity and present it as a brand new idea.

But here we are. As of Oct. 1, 2011, only the spouse drawing a paycheck is credit-worthy. The stay-at-home spouse might as well lie around eating bon-bons because, according to the Federal Reserve, her (or his) work parenting and managing a household is worth nothing. Zero. Zilch. Zippo.

Really, such an outdated attitude boggles the mind.

When my children were young, I tried to impress upon them the importance of considering the “what-ifs” before they acted. (What might happen if you throw the ball in the living room where there are glass lamps?) Would that the Federal Reserve and the new Consumer Financial Protection Bureau had been forced to consider the “what-ifs” of their policies. However, because it appears they weren’t, let’s lay out a few.

Start with one of the more serious, namely, domestic violence. Husbands who are abusive have been handed one more tool for keeping their wives isolated. Since the wife has no credit and no way to qualify for credit, think of his threats about her inability to establish independence and his threats about her not getting custody of the children. Sad to say, the Federal Reserve is on the economic team of the abuser.

For that matter, consider any stay-at-home spouses – women or men – who get divorced; then consider all the basic ways that good credit histories and good credit scores make establishing new lives easier. In effect, the new federal rule re-creates the nightmare scenario divorced women faced a half-century ago. Economic inequity – even if it includes stay-at-home dads – is still inequity.

Retailers are upset with this new rule because stay-at-home spouses do most of the shopping, and they are the ones most likely to apply for “private label” credit cards. (Be honest: If you were a stay-at-home mom or dad, would you apply for a store credit card if you had to have a permission slip from your spouse?)

Evidently, the rationale for this rule centered on the problems college students have handling credit. Certainly the idea that unless college students make enough money on their own, their parents must OK their cards makes sense. However, the unintended consequences for stay-at-home spouses make the rule unworkable and downright appalling.

There is good news. Writing for CreditCards.com, Martin Merzer reported that a “bipartisan group of 25 U.S. representatives is asking the Consumer Financial Protection Bureau to rewrite (the) rule …”

The bad news is that it hasn’t happened yet. Consumers should show outrage.

More to the point, the Federal Reserve should join us in the 21st century.

Ahlin writes a Sunday column for The Forum.