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White House Pressuring Credit Card Companies

Obama administration turns up heat for industry reform

By Mark Huffman
ConsumerAffairs.com

April 20, 2009

In an appearance on NBC's "Meet The Press" Sunday, White House economic advisor Larry Summers said the administration wants to curb a number of current credit card industry abuses.

"Consumers are being charged extraordinarily high interest rates that they wouldn't have agreed to if they had known what they were getting into," Summers said.

Top executives of credit card companies are being summoned to the White House later this week to meet with Summers about their current practices and what the White House would like to see changed. It was at a similar meeting with bank CEOs that President Obama reportedly told the executives "my administration is the only thing standing between your and the pitchforks."

While credit card industry practices remain a sore point with consumers, government regulators have already approved changes that will end some of the practices consumers consider most abusive. However, those changes don't take effect until mid-2010. Congress is looking at addressing these issues legislatively, and the White House has signaled its support.

Rep. Carolyn Maloney (D-NY) introduced credit card reform legislation last year, and the measure has gotten new attention early in 2009. When the House Financial Services Committee held hearing on the Credit Card Bill of Rights last July, Maloney noted that the terms of most credit card agreements made it difficult for most consumers to get out from under crushing debt.

"I believe in personal responsibility, but unfair and deceptive credit card practices have made it literally impossible for consumers to borrow only what they can repay," she told the committee. "I am a strong advocate for the free market, but these practices prevent fair competition."

Sen. Christopher Dodd (D-CT) has introduced similar legislation in the Senate. Meanwhile, the American Bankers Association said the Obama Administration should wait for the new regulations to take effect before pushing for a legislative fix.

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