Discover Card's Worries About New Laws

One of my favorite blogs is footnoted.org which examines public financial documents such as annual reports, 10Qs and other SEC filings to uncover what many companies hate to disclose but have to. They often hide these embarrassing disclosures in footnotes hoping that they won't be read; hence the name.

Here's what the site uncovered about Discover Card which had to acknowledged the following risk factor to its business:

"The company’s second quarter 10-Q, filed yesterday, includes a new risk factor inspired by the Fed’s proposal to tighten its rules on “unfair or deceptive acts or practices” and “truth in lending.” The disclosure says that “if the amendments are adopted as proposed, the amendments would have a material adverse effect on our results of operations.”

As I read it, the credit card company is admitting that in its efforts to find new charges and reasons to extort fees from its users, it has probably crossed the line and will suffer under the Fed's efforts to clean up these abuses.