Government is saving the credit card industry from itself.

I spoke last week with Richard Vague, a onetime banker who was the founder and longtime chief executive of First USA, a major credit card issuer. Vague made the point that credit card issuers are under tremendous pressure to increase their short-term profits right now. "What's changed," Vague says, "is the time horizon." Bank chiefs right now, says Vague, are probably a lot more concerned about the next quarter's earnings than about the years ahead.

Over the long run, charging what amounts to an undefined "market price" is just as bad for banks as for their customers. The Mafia can keep putting the screws on its clients because it has the option of breaking their legs and taking over their businesses. Even the least-scrupulous credit card issuer can't take advantage of these extralegal options. For them, the endgame of arbitrary and outsize rate increases holds not extravagant profits but an epidemic of default. Just look at Advanta.

This is why when all the Sturm und Drang is over, a new set of credit card rules will turn out to be not the death knell for the credit card industry but a lifesaver. The competition to squeeze the last bit of profit from overextended customers is one that the banks should be desperately trying to avoid and are clearly unable to on their own. New rules are the best way to curb the banks' own dangerous short-term impulses. The industry's lobbyists have tried to paint credit card reform on as a declaration of war on the banks. Actually, it's the banks' best chance to end the war with their own clients.