When Hank Paulson scared Congress into passing the Troubled Asset Relief Plan (TARP) last fall, he said that it would be used to buy toxic waste from banks. That never happened. All we know is that $350 billion of our taxpayer money is gone and that most of it went to banks and a bit to the auto industry. What are they doing with our money? How is the government measuring the success of TARP? Is it helping? Until we get those answers, we should not allow more good money to be thrown after bad.

What we have now is a bunch of talk. Sen. Kent Conrad (D-ND) said "Without the first TARP, we may have a Dow at 4,000 right now and the economy in an absolutely free fall." Thanks Kent -- I'd like to see your proof for that claim. Why not Dow 400? Progress on finding out what happened to the money is coming from Sen. Carl Levin (D-MI) who got Treasury to cough up contracts between the government and 10 financial institutions -- by threatening a subpoena.

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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.

Suze Orman has some ideas for cleaning up credit card industry originally appeared on BloggingStocks on Wed, 06 Jun 2007 20:30:00 EST. Please see our terms for use of feeds.