Congress has passed and the president is expected to sign a credit card reform bill that was largely backed by consumer advocates but one which will undoubtedly only make things worse for credit card holders.

As the economy has sunk to depths most people have never experienced in their lifetimes congress set its sights on the credit card industry as a villain for the reason many consumers are swamped with debt.

As in any industry there are dishonest or unscrupulous vendors but the bill congress passed yesterday tars all card issues with the same broad brush and holds them equally accountable for consumer misbehavior.

Groups backing the reform legislation point to the fees and interest that banks collect from credit card users which is close to $20 billion per year but have discounted the fact that the 19 largest banks have suffered $82 billion in losses in the last year as they were forced to write off balances that were no longer collectible due to the deteriorating economy.

But was this legislation necessary? After all the Federal Reserve along with the Office of Thrift Supervision and the National Credit Union Association issued new regulations in December that ban most if not all of the abusive practices that were the source of consumer complaints.

Some clarification of the rules and regulations governing the industry were probably in order as the industry expanded at a rapid rate and credit standards were lowered allowing people who wouldn’t have qualified a few years for a card to rack up huge bills that they couldn’t possibly pay.

At first that was fine with the banks as long as they were receiving the minimum payments but as the economy slowed the high credit risks started to default in droves.

Yet the legislation will actually do more harm than good in the long run.

Credit cards while not the cheapest source of financing has been a valuable tool for small businesses who either couldn’t qualify for a bank loan or who didn’t want to wade through the tedious SBA process and has allowed thousands of businesses to grow and expand.

For cardholders who pay their balances in full each month they are likely to bear the brunt of the new law as banks won’t be able to subsidize them with fees and interest paid by other cardholders and will face the re-imposition of annual fees and other charges that they have been largely immune from.

The bottom line is just like home mortgages; no one put a gun to the head of consumers and forced them to apply for a credit card.  It is the reckless behavior of the consumer and lack of personal responsibility that created this problem.  But as with most liberals, they won’t blame the consumer but chose instead to portray banks and card issuers as the bogey man.  In the end we will all pay for this folly.