Delaware's Plastic Engine 'Running Out of Gas'

Oct. 11, 2008 -- Credit card companies are to Delaware what cars are to Michigan.

More than a decade ago, the little state, home to Democratic vice presidential candidate Joe Biden, banked much of its economy on credit card deregulation -- hoping to attract major credit card companies by loosening the rules.

"They've said, 'Come here. If you're located in Delaware, we're not going to restrain you. You can charge the interest rates you want, the fees you want and you can export them anywhere in the United States,'" said Jim Campen of Americans for Fairness in Lending.

The credit card companies did come, putting a hurt on consumers, but greatly helping the state's economy.

But according to ABC News correspondent David Kerley, the gain is worth the pain.

"Here in Delaware, citizens don't see the credit card companies, their high interest rates and fees, as evil," Kerley said. "Those companies have been an economic engine. But it's an engine that is running out of gas."

The current economic downturn has not hurt many states as much as Delaware.

Twenty percent of the state's financial services jobs are gone and, with further regulation expected to accompany the government's attempt to save the economy, even more are in danger.

"Of course regulation of all the financial services, including credit cards, is looming," Moody's Economy.com's senior economist John Stapleford predicted. "The layoffs are going to continue."

But according to Judy McKinney-Cherry of Delaware's Economic Developement office, even if the credit card industry shrinks, it will have served it's purpose.

"It was really worth it in the long run," McKinney-Cherry told "Good Morning America." "You know, in economic development, if you can get 15 years out of a program, that's a doggone good program."