March 29, 2023

Bucks Blog: Credit Eased for Stay-at-Home Spouses and Partners

Stay-at-home spouses and partners may find it easier to get credit cards under a regulation revised by the Consumer Financial Protection Bureau.

The change, first proposed by the bureau last fall, lets spouses and unmarried partners who are 21 or older and don’t work outside the home, apply for credit based on shared income.

“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” the bureau’s director, Richard Cordray, said in a prepared statement.

The move was made to fix an unintended consequence of the Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act, which became law in 2009. The law requires credit card issuers to evaluate an applicant’s ability to make payments before opening a new credit card account. Generally, under current regulations, card issuers may only consider the individual applicant’s independent income or assets.

The requirement was meant, in part, to protect students from getting into trouble with credit card debt, but it also ended up making it difficult for others to get credit cards. The bureau said data from the credit card industry suggested that otherwise creditworthy applicants were being denied cards and that a “significant number” of them might be stay-at-home spouses or partners. (Comments from the industry noted that military spouses were particularly affected.)

Under the revised rule, applicants who are 21 or older can rely on other income, including that of the working spouse or partner, if the applicant has a “reasonable expectation” of access to it. The bureau said it considered more than 300 comments from the public and industry before deciding on the revision.

Since same-sex marriage is recognized in just a handful of states, the inclusion of “partners” in the rule change is significant for gay couples. The rule applies to all applicants, regardless of marital status, the bureau said.

The bureau noted that Census data indicates that more than 16 million married people do not work outside the home, meaning roughly one out of every three married couples may now have easier access to credit.

The amendment has been submitted for publication in the Federal Register, the bureau said, and becomes effective upon publication. Card companies have six months after publication to comply with the new rule.

Do you think the change makes sense? Could this affect your access to credit?

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Random House and Penguin to Be Combined

Under the agreement, Bertelsmann, which owns Random House, would control 53 percent of the merged publishers. Bertelsmann and Pearson would share executive oversight, with Markus Dohle of Random House serving as chief executive and John Makinson of Penguin becoming the chairman.

The deal would consolidate Random House’s position as the largest consumer book publisher in the English-language world, giving the combined companies greater scale to deal with the challenges arising from the growth of e-books and the rise of Internet retailers like Amazon.

“Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers,” said Marjorie Scardino, chief executive of Pearson, which is based in London.

By taking control of the company, Bertelsmann, which is based in Gütersloh, Germany, hopes to avoid the problems that plagued a 50-50 partnership with Sony of Japan, in which the two companies combined their music recording divisions. The venture, Sony BMG, was riven by management turmoil and differences over strategy, prompting Bertelsmann to sell its share to Sony eventually.

“With this planned combination, Bertelsmann and Pearson create the best course for new growth for our world-renowned trade-book publishers, to enable them to publish even more effectively across traditional and emerging formats and distribution channels,” said Thomas Rabe, chief executive of Bertelsmann, in a prepared statement.

Analysts have raised questions about possible regulatory hurdles to the deal, given that the combined companies would have around one-quarter of the consumer publishing business in markets like the United States. Teams of lawyers from both companies are said to have been huddling in New York for weeks to examine these and other issues related to the deal.

Pearson and Bertelsmann said Monday that “the combined organization’s level of organic investment in authors and new product models will exceed the total investment of Penguin and Random House as independent publishing houses.”

Some literary agents, however, were unimpressed by the prospect of a combined Random House and Penguin, responding to reports of a possible deal last week by saying it could reduce the number of outlets for authors.

The companies said the agreement would exclude certain assets, including Random House’s trade publishing business in Germany. Pearson will retain the right to use the Penguin brand in its education business, which has become the focus of the company’s plans for the future.

Analysts have said the deal could spur further consolidation in the book publishing business, which has remained more fragmented than, say, the music business. Another publisher, the HarperCollins division of News Corp., was said to be interested in Penguin.

But Bertelsmann and Pearson accelerated their talks over the weekend after reports last week, and they said Monday that they hoped to close the deal in the second half of 2013. Pearson said the deal is not subject to shareholder approval.

News Corp.’s interest in Penguin was first reported in The Sunday Times, a London paper that is also owned by News Corporation. According to The Times, News Corp. was exploring a cash offer of $1.6 billion.

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Senate Republican Leader Suggests a Payroll Tax Deal

Under a deal reached between House and Senate leaders — which Speaker John A. Boehner was presenting to the rank and file in an evening conference call — House members would accept the two-month extension of a payroll tax holiday and unemployment benefits approved by the Senate last Saturday, while the Senate would appoint members of a House-Senate conference committee to negotiate legislation to extend both benefits through 2012.

House Republicans — who rejected an almost identical deal on Tuesday on the House floor — caved under the political rubble that accumulated over the week, much of it from members of their own party, who worried the blockade would do serious damage to the party brand heading into an election year. The new deal makes minor adjustments to make it easier for small businesses with temporary new caps on the wages that are subject to the tax relief.

The agreement ended a partisan fight that threatened to keep Congress — and President Obama — in town through Christmas and was just the latest of the fierce fights between House conservatives, the president and the Democratic-controlled Senate. But this one seemed to end in a clear victory for Mr. Obama and the Democrats, at least for now.

The push to find a resolution was touched off Thursday by Senator Mitch McConnell of Kentucky, the Republican leader, who had negotiated the two-month extension and called on the House to accept a temporary continuation of the tax hike and extended unemployment pay as long as Senate Democrats committed to opening negotiations quickly over a yearlong agreement.

“House Republicans sensibly want greater certainty about the duration of these provisions, while Senate Democrats want more time to negotiate the terms,” Mr. McConnell said in a prepared statement. “We can and should do both. Working Americans have suffered enough from the president’s failed economic policies and shouldn’t face the uncertainty of a New Year’s Day tax hike.”

Just hours after Mr. McConnell released his statement, House freshmen began to crumble.

“I’m calling on G.O.P. leadership to immediately bring up the Senate’s two-month extension for an up or down vote,” said Representative Sean Duffy of Wisconsin, who voted against the deal earlier in the week. “Middle-class families deserve a Congress that will rise above the squabbling and ensure their taxes don’t go up right after Christmas.”

On the Web site of Representative Rick Crawford of Arkansas were two statements, one from Tuesday proclaiming his vote against a Senate bill, and a new message on Thursday in a letter to Mr. Boehner. “We are now in a position that requires all options to be on the table, that requires Republicans to not only demand a willingness to compromise, but to offer it as well,” Mr. Crawford wrote in the letter to Mr. Boehner. “More often than not an ‘all or nothing’ attitude produces nothing.”

Mr. McConnell’s statement gave a lifeline of sorts to House Republicans by opening the door to a change in the length of the extension — some Republicans say a three-month fix would be easier for employers to handle — that sought to find a face-saving way out of the conflict. Many Republicans had acknowledged it had the capacity to harm their party in the opening days of an election year that would pick a president and decide control of the divided Congress. Many Senate Republicans and other party members expressed deepening worry that the fight was whittling away at their chance to take back the Senate, remove Mr. Obama and even hold their significant majority in the House.

At the same time, some of senior members of the Republican Party — ranging from Senator John McCain of Arizona to prominent analysts like Karl Rove — see the possibility of a Republican-controlled Congress next year and even a Republican in the White House, and are dismayed by what they see as the suicidal tendencies of the newest members of the House, who they feel should put the party’s endurance through 2012 over perfect legislative goals.

“I don’t care about my re-election effort,” said Representative Tom Reed of New York, a conferee appointed by Mr. Boehner to negotiate a deal. “I came here to do what’s right for America.”

The deal also offered Mr. Boehner something that has often eluded him this year: a sense of consequences for his rowdy freshmen members who have helped Republicans push their cost-cutting agenda further than the party could have ever hoped, but with high cost to how it is perceived.

Earlier in the day, Mr. Obama was flanked by 16 unidentified Americans who had responded to a White House campaign soliciting responses to its Web site, Twitter and Facebook about what they would sacrifice if their take-home pay was reduced by $40 a week, the average weekly tax break for a family making $50,000 a year.

Jackie Calmes contributed reporting.

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