On Aug. 27, the Kerry-Edwards campaign proposed plans to curb abusive credit practices. The American Financial Services Association (AFSA) said these measures show a basic lack of understanding about how the consumer credit market operates.

"Limitations on a creditor's ability to use risk-based pricing would result in responsible consumers who pay their bills on time having to bear the burden of higher costs incurred by the industry from consumers who fail to properly manage their use of debt," said AFSA in a statement. "Over the past 80 years, risk pricing based on actuarial standards or their equivalents has evolved the U.S. financial services system into the most efficient in the world, and one that serves more of its population that any other. The type of tinkering with the system manifested in the Kerry-Edwards proposals would open a 'Pandora's box' in one foundation of our national economic system."

To cure lending abuses, AFSA prescribes consumer education and financial literacy.

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