WASHINGTON — Armed with letters from Americans hit hard by soaring credit card fees and rates, President Barack Obama warned credit card executives Thursday that he'd happily sign into law tough new regulations that are working their way through Congress.
Obama called the White House meeting constructive and lauded the role of credit cards for people and businesses in facilitating quick purchases. He also described some credit card companies' practices as "abuses," however, and laid out principles for tough new limits.
"Credit cards are an important convenience for a lot of people," he said as he concluded the meeting with 14 bankers and credit card executives. "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, 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."
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The executives came and left the White House by a side door, avoiding reporters. The American Bankers Association issued a statement saying the executives would work with the president to address his concerns.
The companies told Obama that they're already implementing new regulations proposed by the Federal Reserve, rules they said "are likely to shrink credit availability and result in increased rates for some consumers," according to Edward L. Yingling, the president of the ABA and a participant in the meeting.
The bankers also have warned that the rules pending in Congress could choke off credit.
The House Financial Services Committee on Wednesday passed a measure that would ban credit card companies from raising rates on existing balances and charging late fees when they haven't given customers enough time to make payments.
The bankers association said the bill would "have a negative effect on lenders' ability to offer reasonably priced credit to consumers and may make matters worse for the broader economy."
Similar legislation is proposed in the Senate, Obama said he had several principles for any bill he'd sign.
"There has to be strong and reliable protections for consumers — protections that ban unfair rate increases and forbid abusive fees and penalties," he said. "The days of any time, any reason rate hikes and late fee traps have to end."
Also, he said, all forms and statements must be written in plain language. "No more fine print, no more confusing terms and conditions," he said.
Finally, he said, credit card companies should make contract terms available online so that consumers can easily compare different cards.
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