Many bloggers these days are discussing Tuesday’s Credit Card Company Senate Hearings. (Wake up. I promise that’s kind of interesting, actually.)

U.S. News & World Report’s Alpha Consumer has this to say:

The arguments are basically over whether credit card companies treat their customers fairly. Consumer rights groups and certain members of Congress, such as Sens. Carl Levin and Claire McCaskill, Democrats from Michigan and Missouri respectively, think credit card companies are unfair in the aggressive way they solicit customers and then raise interest rates when customers start to struggle with their debt.As McCaskill put it, “It seems part of the problem is that the behavior you encourage is the behavior you use to raise interest rates.” (McCaskill has personal knowledge of the problems with this system: Even after the senator closed one of her mother’s credit card accounts, her mother received blank checks from the company in the mail.)

On the other side of the debate, credit card providers argue that without the ability to raise rates on those with high risk factors, they may have to raise rates on all customers to offset the losses from that group, or stop offering credit to some people altogether.

As you may imagine, local bloggers have more than a little to say about this whole thing. Mack of Coyote Chronicles is doing some hard thinking on the subject.

So, heres my question for you “free market” gurus out there. Without regulation, what protection does the consumer have? It might be different if there were hundreds of competing banks out there, but the reality is that mergers have eliminated most real competition. You can make the argument that people who can’t pay their balances in full every month should not take out a credit card, but thats more than a little disingenuous since we would see a staggering drop in consumer spending if people only spent when they could pay cash. The restaurant and travel industries would suffer immediately. I doubt there would be a Black Friday at all. Don’t even get me started about the car business.