Obama to sign credit card crackdown into law
WASHINGTON (Reuters) - President Barack Obama was expected to sign into law on Friday a package of sweeping new limits on credit card interest rates and fees that won final approval from the U.S. Congress on Wednesday .
In a major victory for the president and congressional Democrats, the House of Representatives voted 361-64 to approve the so-called "credit cardholder bill of rights".
Taking full effect in February 2010, the bill would sharply restrict credit card issuers' ability to raise interest rates on cardholders' existing balances; to charge certain fees; and to slap cardholders with unreasonable penalties.
The bill will hurt the profits of major card issuers such as Citigroup, Bank of America, JPMorgan Chase and Capital One, analysts said.
It represents the first of several reforms on banking and market rules expected from the administration as it tightens regulatory oversight in hopes of preventing another financial crisis like the one now pounding economies worldwide.
A White House official said Obama will sign the bill at a ceremony scheduled for 1500 EDT on Friday.
The bill could hit home with more consumers than any other economic initiative the Obama administration has launched so far, with some experts predicting a broad restructuring of how credit cards are priced, managed and marketed.
"These are monumental and expensive changes for credit card issuers to implement," said Duncan Douglass, a lawyer with the firm of Alston & Bird who specializes in payment law.
Americans owed more than $945 billion in credit card debt in March. That level has fallen lately as households pull back during the recession, but credit card indebtedness is still up about 25 percent over a decade ago, reflecting an explosion in consumers' access to and use of plastic.
Seventy-eight percent of U.S. families have a card and average debt among families with a balance was $7,300 in 2007.
BANK STOCKS MIXED
American Express Chief Executive Kenneth Chenault said the new rules under the bill would likely hurt his company and reduce credit. "It's more negative than positive," he said on a Wednesday conference call hosted by Calyon Securities.
The KBW Banks index of 24 leading bank stocks closed down 2.8 percent on Wednesday following the House vote, with broader market indexes down modestly on the day.
Capital One shares closed off 7.2 percent at $23.11; JPMorgan, off 3.5 percent at $34.55; Citigroup, off 2.1 percent at $3.69; Bank of America, up 2.1 percent at $11.49.
Among credit card giants, MasterCard closed up 1.7 percent at $169.63; Visa Inc up 0.25 percent at $64.96; and American Express Co, down 3.3 percent at $23.98. Continued...
