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Obama Meets With Credit Card Honchos: Pledges Support For Credit Card Bill
President Obama threw his support on Thursday behind legislation that would keep banks from imposing higher fees and interest rates on credit card users, and said terms must be “written in plain language and be in plain sight.”
“The days of any-time, any-reason rate hikes and late-fee traps have to end,” the president said at the White House after meeting with top executives from the nation’s largest credit card companies, a session Mr. Obama called “constructive.”
“No more fine print, no more confusing terms and conditions,” the president said, following up on campaign pledges to try to curtail high fees and rates and chop away at the thickets of fine print in credit card statements.
The meeting came as the House was preparing to adopt new restrictions on credit cards. Lawmakers said on Thursday that they had agreed to make some amendments to the legislation that were being sought by senior White House officials. One provision would require the credit card companies to apply consumer payments first to any debt that has the highest interest rate.
Mr. Obama said he told the executives that credit cards are “an important convenience for a lot of people” in their personal and business lives, and that “we want to preserve the credit-card market.” But he said there must be “some core principles” accompanying credit card use from now on, based upon clear language and online access to contract terms.
On Wednesday the House Financial Services committee overwhelmingly approved a bill that would reduce many fees and limit the ability of the credit card companies to charge penalties. The bill, sponsored by Representative Barney Frank, Democrat of Massachusetts, and Representative Carolyn B. Maloney, Democrat of New York, was adopted 48 to 19.
The bill put into law most of the credit card restrictions adopted last year by the Federal Reserve, and also imposed some new rules on the industry. It would, for instance, prohibit the companies from marketing credit cards to minors. It also would require the companies to provide more information to regulators and permit consumers to order companies to set their credit limits at amounts lower than the card company was willing to offer.
Congressional aides said the measure could reach the House floor as early as next week, and they predicted swift passage.
A similar bill was adopted by the Senate banking committee three weeks ago, but its narrow passage and opposition from all of the committee’s Republican members indicated that it faced an uphill battle.
Despite the hurdles, President Obama said Thursday he was confident that responsible people in the industry “will engage with us in a constructive fashion, and that we’re going to be able to get this done in short order.”
Industry lobbyists have been working closely with Senate Republicans to try to block the passage, although the White House’s recent push for the measure could make that difficult. During the presidential campaign, Mr. Obama made an issue of what he considered excessive credit card fees, but until this week he had been largely silent on the matter since his arrival in Washington.
Industry executives and lobbyists say that the proposals are unnecessary because the Federal Reserve has already adopted a series of restrictions that will go into effect next year. They say the legislation would have the effect of further reducing lending at a time when credit card companies and consumers are facing tight credit restrictions because of the difficulty of obtaining financing in the secondary markets.
“The legislation would add significant uncertainty to an already uncertain market,” said Edward L. Yingling, president and chief executive of the American Bankers Association. “Half of credit for credit card loans is financed through securitizations, and that market is already basically frozen.”
In the House committee vote on Wednesday, nine of the panel’s 29 Republicans broke ranks to join the Democrats in supporting the measure. Last year, the House adopted legislation by a vote of 312-112, but the industry successfully worked with allies in the Senate to prevent it from moving forward.
The House bill would restrict a credit card company practice of calculating interest charges on balances from more than one billing cycle and generally limit the companies’ ability to raise rates without notice. It would force the companies to apply any payments over the minimum either to the highest-rate debt or equally among all of the cardholder’s debts. Most companies now apply such payments to the debt with the lowest interest rate first.
David Stout contributed reporting.
Obama Pressures Credit Card Companies on Rates – NYTimes.com.
