WASHINGTON (Reuters) - President Barack Obama urged U.S. credit card company executives on Thursday to stop unfair rate increases and be more transparent and accountable, tapping into popular outrage over abusive lending.
“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,” Obama told reporters after a White House meeting with 13 executives from top banks and companies that issue the cards.
The credit card issue could be a political winner for Obama, with many Americans saying they are angry over lending practices.
Obama said he wanted new legislation being considered by the U.S. Congress to protect consumers against unfair rate increases and ban “abusive fees and penalties.”
“The days of any time, any reason rate hikes and late fees has to end,” he said, as he sat at a long table surrounded by the credit card executives.
Obama also wants the legislation to ensure that credit card forms and statements are in plain language. “No more fine print, no more confusing terms and conditions. We want clarity and transparency from here on out,” Obama said.
“We need more accountability in the system. That means more effective oversight and more effective enforcement so that people who are issuing credit cards and are violating the law will feel the full weight of the law,” he said.
The American Bankers Association trade group said executives carefully listened to Obama during the cordial meeting and agreed to try to address industry practices. They also told Obama that the Federal Reserve’s sweeping new rules “directly address” many of the issues raised by the administration and Congress.
ABA President Ed Yingling, who attended the meeting, said Obama wants companies to issue a simple credit card product and come up with a simple method for people to comparison shop for credit cards online.
“In looking at what they said, we know that they’re going to put on the table a plain vanilla card that they want everybody to offer, so people have access to a simple product,” Yingling told Reuters.
Executives from Bank of America Corp, American Express Co, Citigroup Inc, Wells Fargo & Co, JPMorgan Chase & Co, Capital One Financial Corp, Visa Inc and MasterCard Inc were among those invited to the White House meeting.
The meeting came a day after a House of Representatives bill to curb credit card fees and limit penalties cleared a key panel.
The legislation — dubbed the Credit Cardholders’ Bill of Rights — would codify into law restrictions on deceptive practices issued by the Federal Reserve in December.
The legislation would stop credit card issuers from imposing arbitrary interest rate increases and penalties, while halting certain billing practices. A separate version of the bill is under review in the Senate.
White House spokesman Robert Gibbs said Obama supports congressional action that goes beyond the Fed rules and will be working with lawmakers so that he can sign into law a final bill “very soon.”
Democratic Senators Christopher Dodd and Charles Schumer sent a letter to federal regulators, urging them to take swift action to halt interest rate hikes on existing balances.
“It is long past time for the regulatory agencies to act with the same sense of urgency to protect consumers from the behavior of those same financial companies,” they wrote.
Lawmakers have expressed outrage that many of the card-issuing banks are the same ones that have received government bailout money, paid for by the U.S. taxpayers who use the cards and are being saddled with the high fees.
The House of Representatives is expected to vote on the bill next week, possibly with changes that Obama wants.
The effort to tighten the rules on those companies is part of a broader regulatory reform agenda Obama is pursuing after taking office in January amid the worst economic crisis in decades.
Banks say the tighter rules for card issuers would hurt fee income when they are trying to climb out of a financial hole created by the collapse of the housing boom.
Additional reporting by Ross Colvin, Caren Bohan, Rachelle Younglai and Karey Wutkowski; editing by Carol Bishopric