“The days of any time, any reason rate hikes and late fee traps have to end," President Obama said as he sat around a table with top executives of 14 credit card companies today.
Sitting in the Roosevelt room in the private meeting, Mr. Obama told the executives that every day he reads 10 letters, winnowed from the thousands the White House receives (as we told you in February), and on average one of the 10 is someone complaining about unfair credit card company practices.
The president told them "of the abuses and some of the problems that a lot of people are familiar with," as he said with reporters present, "people finding themselves starting off with a low rate and the next thing they know their interest rates have doubled; fees that they didn’t know about that are suddenly tacked on to their bills; a whole lack of clarity and transparency in terms of the terms and conditions of their credit cards.
Mr. Obama outlined four core proposals that he’d like to see:
• Banning unfair rate increases and forbidding abusive fees and penalties;
• “No more fine print; no more confusing terms and conditions";
• Having every credit card company "issue a plain- vanilla, easy-to-understand, simplest-terms-possible credit card as a default credit card that the average user can feel comfortable with"; and
• Requiring more accountability in the system, more effective oversight and more effective enforcement.
Some of the attendees from the credit card industry said the meeting was more "political theater" than anything else, more for the cameras than about substance. The industry sees the measures it’s been taking as necessary in a recession, with Americans accruing more credit than ever before and many not paying their bills.
The Federal Reserve is about to issue new regulations relating to credit cards. At the meeting, Pamela Joseph, Vice Chairman of Payments for US Bancorp, told President Obama that it was her task to make the case to him as to why the industry feels those regulations will be enough and the legislation making its was through Capitol Hill is not needed.
"Go ahead and make your case," the president said, "but I disagree."
With cameras in the room, he said, "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. And so there’s going to be action in Congress. Our administration is going to be pushing for reform in this area. We think it’s important that we get input from the credit card issuers as we shape this reform.”