[dragonwriter]

The cost of limited consumer liability for stolen cards is spread across all consumers in other card fees (perhaps hidden ultimately in network/merchant fees, and thus spread further in consumer prices.)

In a competitive credit card market (which we may not really have, but that's a different problem) an issuer reducing the incidence of lost would be able to compete better by either lowering charges or providing greater benefits while making the same profit, forcing other issuers to match those features or be driven out of the market.