A WSJ op ed today predicts that there will be an almost 60 percent contraction in credit card lines. I don’t know whether that number is precisely right but it is clear that banks are sharply reducing the availability of credit card lines. They are doing so in part for very good reasons and they would be nuts not to.

Lots of previously creditworthy borrows before simply aren’t anymore and the last thing banks need is more bad debt. But there is a risk that the combination of overreaction and bad public policies will reduce lending too far. The freezing of consumer and business credit markets is considered by many economists to be the problem at the core of the financial crisis and getting credit moving again is critical.

Credit cards have been extremely important for people to manage fluctuating income, especially early in their lifecycles, and has been critical to new small businesses that have used small loans from their credit cards to finance businesses. Now isn’t the time for the government to be imposing regulations on banks—the Unfair and Deceptive Acts of Practices (UDAP) bill is an example—that will encourage banks to further restrict the supply of credit. UDAP should be reconsidered in light of the current crisis. Rather than talking about accelerating its adoption we should be thinking about putting a moratorium on any regulations that will further restrict the supply of credit.

There is simply no evidence that the availability of credit card loans had anything to do with the financial crisis, and there are lots of reasons to believe that making relatively small loans available to people through credit cards has become increasingly important.