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Two Ways: Credit-Card Issuers Discredited


Strengthen your portfolio in good times and bad.

The credit-card reform bill passed its way through the US Senate today by an overwhelming majority as the government responded to increasing consumer rage over higher fees and higher interest rates.

According to the New York Times, the Senate passed the bill by a 90-to-5 vote; the House of Representatives passed it by a 350-to-70 margin on April 30. This makes it likely that President Barack Obama will have the bill on his desk before the holiday weekend.

If passed, the new law wouldn't go into effect until February of next year. Nonetheless, proponents of the measure say they want to make card-issuers spell out the terms more clearly and treat customers more fairly - meaning such things like sudden interest-rate hikes on existing balances will be verboten, unless a customer is more than 60 days behind.

Opponents say the bill will have unintended circumstances: Banks may be forced to issue less credit cards and making credit harder to get at a time when US consumers need it most.

Credit-card debt has jumped by 25% in the last decade. The Federal Reserve said that delinquency rates rose in the first quarter to 6.5%, the highest they've been since the central bank began tracking the data in 1991.

From the Bull Pen: The first big test is up for MasterCard (MA). The stock could see a bounce off of $165 support while a close below could signal more selling. Bulls can enter there with a sell stop near $163-ish.

From the Bear Cave: It looks to be tough times ahead for American Express (AXP). And technically the stock could be tracing out a bearish head-and-shoulders pattern. Look out below if the stock falls below $23.

Getting closer to that holiday weekend! Good night and see ya in the morning!
No positions in stocks mentioned.

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