In the memorable movie “The Graduate,” a family friend of the Braddocks, Mr. McGuire, says to the aimless Benjamin Braddock (Dustin Hoffman): “Let me give you one word — plastics. There is just one great future in plastics.” McGuire was indeed a prophet. David Robertson, publisher of The Nilsson Report, an industry newsletter, wrote that 555 million plastic accounts are in the marketplace.

Senate Banking Committee Chairman Christopher Dodd said, “Credit Cards are a tremendously valuable tool for consumers. … We just want it to work better.” Dodd led Congress’ efforts to pass The Credit Card Accountability Responsibility and Disclosure Act on May 22, 2009.

These were some of its key features:

Credit card companies must take into consideration the consumer’s ability to repay debt before giving them a new card or allowing credit lines to be increased.

Credit card companies must keep the same due date each month.

Credit card companies can no longer charge fees for payments made online.

Lenders will no longer be able to charge over-the-limit fees unless the cardholder has authorized over-the-limit transactions.

The Card Act became effective nine months later.

Dodd recently admitted that the delay allowed the banks to get the bill’s intended benefits limited. Dodd blamed bank lobbyists for both weakening the bill’s provisions and eliminating any remedial action on debit cards.

Several senators supported Dodd’s assertions. Sen. Bernie Sanders, D-Vt., cited a recent report from the Consumer Education Foundation that said the financial services lobby spent $5.1 billion on campaign contributions and lobbying in the past decade. He also noted that it has five lobbyists for every member of Congress. Dick Durbin, D-Ill., recently told a local Chicago radio station that the banking industry “frankly owns the place.”

Critics fault the Card Act because it does not limit how high interest rates can go. For example, credit card companies got a proposed maximum 36 percent annual percentage rate on credit cards killed. An industry lobbyist told Laura Strickler, a CBS News investigative reporter, that in a few cases credit card issuers are already charging more than 36 percent — if you include charges for late payments, insufficient funds, annual fees and cash advances. Shockingly, he told her that the industry could not survive if it were limited to 36 percent APR.

Elizabeth Warren, a Harvard law professor and chairwoman of the congressional panel charged with overseeing the Treasury spending of TARP funds, said, “We have about 50 million American families who cannot pay off their credit cards. This is short term, high-interest debt with a lot of tricks and traps in those contracts. We have 50 million families who are walking around, carrying sticks of dynamite, and the fuse is lit. “

Banks respond that they are losing money on cards because of high default rates. Jamie Dimon, chief executive of J.P.Morgan Chase, confirmed that the current default rate of 10 percent will hurt his bank’s profitability.

“We know we are going to lose a lot of money next year in cards,” he said, “and it could be north of $1 billion in both the first quarter and the second quarter.”

Credit cards historically were a profit center, producing tens of billions in annual profits. They made money when the default rate hovered around 4 percent.

A study by the Pew Charitable Trusts, released on October 12, 2009, concluded that the 12 largest banks, issuing more than 80 percent of the credit cards, still use practices that the Fed concluded were “unfair or deceptive.”

Already, banks are shifting to a different model:

A smaller pool of Americans will be eligible for credit cards.

Customers with cards will probably pay more for the privilege through annual fees and higher interest.

Since the passage of the act, interest on credit cards has risen to 13.7 percent, up from 11.94 percent a year ago, according to an analysis of government data by Foresight Analytics.

In our modern era, Mrs. Robinson would use plastic to pay for her hotel escapades with Benjamin. In the morning she would face the consequences of being both an adulteress, and in debt.

Originally published in the Sarasota Herald-Tribune