Letter from Mothers & More Addressing Concerns About New Credit Card Rule’s Impact on Families

New “Regulation Z” to Prevent Stay-at-Home Parents from Accessing Credit

Elmhurst, IL – Mothers & More CEO Gina M. Earles and Board President Tara Brettholtz sent the following letter to Dr. Elizabeth Warren at the Consumer Financial Protection Board expressing their concerns of a Federal Reserve Board’s ruling that could prevent families from obtaining credit. The letter was also sent to the Board of Governors of the Federal Reserve:

Elizabeth Warren, Consumer Financial Protection Board

April 26, 2011

Dear Dr. Warren:
We are writing on behalf of a national non-profit organization, Mothers & More, which represents over 4,000 members in 100 chapters across the country. Mothers & More is dedicated to improving the lives of mothers through support, education and advocacy. As such, a cornerstone of our programming is helping mothers develop financial literacy skills and promoting steps to build their financial security.

We have been watching the actions of the Federal Reserve Board with great interest and concern, particularly as new language and a new rule with respect to Regulation Z was approved on March 18th that could effectively eliminate a stay-at-home mother’s ability to get credit in her own name alone. The new rule states that “credit card applications generally cannot request a consumer’s “household income” because that term is too vague to allow issuers to properly evaluate the consumer’s ability to pay. Instead, issuers must consider the consumer’s individual income or salary.”

Mothers & More believes that a mother who spends the bulk of her time caring for her children with little or no “individual income” should have the ability to develop and maintain her own financial identity, which includes the responsible use of credit. We see a risk to some mothers, and a loss of their autonomy, in requiring the cooperation of their spouses to co-sign their credit applications. In abusive situations, or even when two spouses simply disagree on whether to open a new credit account, the result is that the spouse without her own income will be always be the one who is unable to control the outcome, and this is deeply unfair.

We are concerned that without greater protection, many responsible mothers could begin to lose access to credit and could even see their credit scores drop. Building credit is not only important for the purpose of borrowing money, but for building a reputation of trustworthiness. Employers, insurance companies and utility companies can use a consumer’s credit score in order to make decisions about doing business with her. Therefore, the consequence of this rule is that the economic security of millions of married women is impacted beyond just their ability to get their own credit, despite the Federal Reserve Board’s stated intent to protect consumers.

Mothers & More strongly believes in the value of care-giving work and is deeply committed to promoting mothers’ financial security regardless of whether they work for pay. In keeping with those beliefs, we will continue to monitor any changes to banking rules and regulations that could impact our constituents. Though we recognize the need to limit the extension of credit to those who will pay it back, we believe that it is unfair to assume that a married woman must have her own income in order to be credit-worthy. We respectfully ask you to protect the financial security of mothers who work for little or no pay by restoring their ability to obtain credit in their own names alone.

Sincerely,

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Mothers & More is a non-profit organization dedicated to improving the lives of mothers. It is committed to creating a place for mothers to feel a part of a larger community of women who are experiencing the challenges that all mothers face, not only in raising children but also in fulfilling their sense of self and understanding society’s often mistaken assumptions about them. The organization addresses mothers’ needs as individuals and members of society and promotes the value of all the work mothers do.