Suze Orman has some ideas for cleaning up credit card industry

While Suze Orman certainly has her critics, I believe she has hit the nail on the head with her recent look at the need for reform in the credit card industry: "It would also be helpful if the credit card companies were required to clearly explain all their fees and interest rates. I was pleased to see that Sen. Carl Levin (D.-Mich.) recently stated that he found the fine print language of credit card agreements unwieldy -- and he's a graduate of Harvard Law School. There's no reason that all the pertinent credit card charges and policies can't be laid out in a clear, one-page chart ... We require high school students to take driver's education and pass a written and driving exam before we allow them to operate a car. But we do absolutely nothing to educate them on how debt works, and instead allow credit card companies to set up booths at freshman orientation and sign kids up to cards with sky-high credit limits."

The SEC has done a pretty solid, for the most part, job of cutting down on investors getting duped, not with micromanagement, but with broad disclosure laws. If the Congress is going to take on the credit card industry, as it should, it should adopt the same model. If the Congress can accomplish two things, we can make a big dent in the credit card crisis:

1. Require clear and concise disclosures of the terms of the credit agreement -- not microscopic legalese -- Clear language that people can understand.
2. Once we've required credit card companies to disclose the terms clearly, we need to make sure that people can understand them. As Orman points out, we require people to pass a test before they can drive. Here's an idea: How about a 10 question credit literacy test, administered with the driver's license test. If you can't pass the credit test, you can't get a driver's license. That should get teenagers excited about financial literacy!

The Congress can certainly play a role in cracking down on predatory lending, but it should probably be limited to two things: Mandating clear disclosures and making sure that consumers are educated.