WASHINGTON — President Barack Obama said today he is determined to get a credit-card law that eliminates the tricky fine print, sudden rate increases and late fees that give millions of consumers headaches.
“I trust that those in the industry who want to act responsibly will engage with us in a constructive fashion, and that we’re going to get this done in short order,” Obama said, delivering a pointed message to leading executives of credit-card issuing companies after a closed-door White House meeting.
Both the House and the Senate are pursuing bills to give consumers greater protections as an expansion of new rules slated to take effect next year. Obama said his economic advisers will examine the various proposals and work with Congress and the industry, but he made clear he intends to sign a law.
“The days of any time, any reason rate hikes and late fee traps have to end,” Obama said.
Industry executives left the White House without talking to reporters.
At issue is how to protect consumers, particularly in a severe recession, while not imposing the kind of rules that could make it harder for banks to offer credit or put credit out of reach for many borrowers.
White House press secretary Robert Gibbs said that in the meeting, the company leaders told Obama that the credit-card regulation already ordered by the Federal Reserve “is probably enough.” Yet Obama wants more.
He outlined the principles for any legislation: Protections so that consumers won’t face sudden, surprising jumps in fees; requirements that companies publish their forms in plain-spoken language, with no more fine print; the availability of customer-friendly comparison shopping on credit-card offers; and greater enforcement so that violators feel the full weight of the law.
The president made no mention of the responsibility of consumers to keep themselves from getting overextended.
As one possibility, Obama said it may help if all credit-card issuers offer a basic, “plain-vanilla” card as a default option for consumers.
The president also acknowledged the importance of credit cards; almost 80 percent of U.S. households have one.
Credit cards often serve as a vital source of liquidity, both for individuals and small businesses.
“We are confident that we can arrive at something that commonsensical, something that allows the industry to continue to provide loans and to run a stable business model that’s not dependent on bubbles, that’s not dependent on people getting overextended,” Obama said.
Credit-card debt has increased by 25 percent in the past 10 years, reaching $963 billion by January, according to figures released by the White House. The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008, according to CreditCard.com, an online marketplace designed to link consumers and card issuers.
The day before the meeting, Kenneth Clayton, senior vice president for card policy at the Americans Bankers Association, said emerging legislation may make economic matters even worse by shrinking lenders’ ability, resulting in “less credit available to vast numbers of Americans” at just the wrong time.
The Federal Reserve has already ordered new rules, to take effect July 2010, that are designed to enforce a host of new consumer protections.
On today, Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, and another panel member, Sen. Chuck Schumer, D-N.Y., wrote a letter asking the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration to enforce those rules immediately.
The effect would be put emergency freeze on interest rates tied to existing balances on credit cards. A Federal Reserve spokeswoman said the Fed received the letter and was considering the issues raised in it.
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