President Obama spelled it out for credit card issuers in large type Thursday — no more “unfair” fees, sudden rate increases and misleading fine print.
“The days of any time, any reason rate hikes and late-fee traps have to end,” Mr. Obama said after meeting in the White House with executives from 13 of the largest credit card issuers, including Bank of America and Capital One Financial.
“We want clarity and transparency from here on out,” Mr. Obama said.
The president threw his weight behind efforts in Congress to regulate the industry. The toughest measure, sponsored by Sen. Christopher J. Dodd, Connecticut Democrat, would ban interest rate increases on existing balances for any reason, and on new purchases except when a borrower falls behind on payments.
“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,” Mr. Obama said. “People who are issuing credit cards but violate the law, they will feel the full weight of the law.”
Still, the president highlighted the important role credit-card lending plays for families and small businesses.
“We want to preserve the credit card market, but we also want to do so in a way that eliminates some of the abuses and some of the problems that a lot of people are familiar with,” Mr. Obama said.
The president also asked that card issuers make available “a plain vanilla” account with simple terms that are easy to understand.
Industry representatives pledged in diplomatic terms to cooperate with the administration and find a balanced solution.
“Today’s meeting was very productive and we appreciate the opportunity to meet with the president and we look forward to maintaining a dialogue with the administration,” said Richard Struthers, president of global card services for Bank of America, who attended the meeting.
Kenneth Clayton, senior vice president of the American Bankers Association, expressed concerns that the reforms Congress is considering could reduce consumers’ access to credit.
“How do you get that balance between addressing concerns about consumer protections but not taking actions that have the effect of eliminating credit or raising the price of it?” he said.
Consumer advocates were pleased.
“I am extremely excited by [the president’s] comments on the ‘any time, any reason’ issue,” said Linda Sherry of Consumer Action, referring to card issuers’ ability to raise interest rates on existing customers.
“I like the idea that there needs to be some teeth in these laws and regulations,” she said.
Greater consumer protections are advancing on three fronts.
The Federal Reserve published a set of relatively mild regulations in January that would not take effect until July 2010.
Bills by Rep. Carolyn B. Maloney, New York Democrat, in the House and by Mr. Dodd in the Senate have been passed out of committee. Both would increase regulatory oversight of the industry and take effect much sooner than the Fed rules.
The credit card executives argued that “what the Fed is doing is probably enough,” White House press secretary Robert Gibbs said after the meeting, while Mr. Obama sees “things that must be done above and beyond what the Fed has proposed.”
Among those with the president at the meeting were Treasury Secretary Timothy F. Geithner, the president’s senior adviser Valerie Jarrett, top economic adviser Lawrence H. Summers and Chief of Staff Rahm Emanuel.