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Obama Urges Credit Card Reform

By Michael D. Shear
President Obama used his weekly radio and Internet address to reiterate his call for credit card reform, saying the nation can no longer tolerate an "anything goes" mentality by the credit card companies.

Obama has urged Congress to pass legislation that would do away with some of the most aggressive fees, penalties and interest rates levied by the credit card companies on their cardholders.

Last month, he met with the heads of the largest credit card companies to urge them to get on board with the reforms.

"Americans know that they have a responsibility to live within their means and pay what they owe. But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties, and hidden fees that have become all-too common in our credit card industry," he says in the address. "You shouldn't have to fear that any new credit card is going to come with strings attached, nor should you need a magnifying glass and a reference book to read a credit card application."

Obama cast the reforms as part of his broader efforts to restart and revamp lending in the struggling economy. The president said Congress should finish action on a bill soon so that he can sign it into law by Memorial Day.

"There is no time for delay. We need a durable and successful flow of credit in our economy, but we can't tolerate profits that depend upon misleading working families. Those days are over," he said.

But credit card executives have said the proposed legislation would make it more difficult for them to lend, not less. And they have warned that enacting the new rules now could have a negative effect on the economic recovery.

By Web Politics Editor  |  May 9, 2009; 9:00 AM ET
Categories:  Economy  
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I will make this fast and simple We need a fixed rate national credit card example 5% for all, credit limit would be based on your last income tax statement and any profits would to to the social security fund. The card would be as strong as the US dollar and the retailer would not be charged more than 1% for using the service.

Posted by: eastwing | May 11, 2009 11:55 PM | Report abuse

Consumers should have the right to opt out WHENEVER there is change in terms.

Upon opting out, the consumer agrees to continue to pay down the debt, won't use the card anymore, and gets to keep the terms that were already in effect and agreed upon by both parties before the change in terms go into effect.

Additionally, the consumer should be allowed to opt out even if they don't read the fine print buried somewhere in the back of the bill, meaning if they notice it on the first or second billing cycle in which the change is visible, that should not be called too late a time to opt out. Otherwise we all have to be lawyers reading the fine print on every single bill we get.

A consumers credit rating should not be penalized because they opt out of a change in terms. Punishing a consumer for making a responsible decision to stop using a card is crazy.

These are such basic consumer tenets that need to be upheld and enforced that to argue against them is to be an imbecile.

Posted by: AlessandroMachi | May 11, 2009 4:42 PM | Report abuse

Lets put this in proper alignment.

1. Diners Club starts - uses country club billing
2. Bank cards and private label revolving cards are started.
3. Banks, networks, and customers sign contracts and establish parameters and risk ratios.
4. Credit cards become incredibly successful
5. The federal government decides to ignore contracts and decide what to do to protect people who don't read contracts or can't pay bills. (They do vote, unfortunately.)

Any talk of working with Washington, of setting fees, and helping people is Marxist.

You can moan all you want, but, sorry, just ask an honest Marxist, not like the subrosa crowd slinking around now.

Sure, you can moan about federal interest in interstate commerce or regulating federal banks, but don't kid yourself, comrade. This has nothing to do with the powers granted in the constitution.

If all this manipulation goes into effect, then interest rates go up on everyone and acceptance rates go down, which is probably what the banks should have been doing.

Say, let's do Fannie Mae all over again.

Posted by: getgene | May 11, 2009 3:26 PM | Report abuse

Two recurring problems:

Issuers violate the Fair Credit Reporting Act by jacking up interest in reaction to a "hit" on their customer's credit report having nothing to do with the issuer. Advance notice and an affirmative step by the cardholder, i.e., using the card after receiving the notice, are already required by law, but enforcement is needed.

"Teaser rate" lies: you're promised a 3.99% rate on a balance transfer for, say, nine months. Of course, the 3 percent transaction fee more than makes up for the lost interest, because they get it up front. Worse, they DON'T maintain the rate, because if you use the card and then pay the new amount borrowed, they credit it against the "teaser" balance, moving the same amount of money into the much higher rate. Smart people who do balance transfers lock the card up for the low interest period. Stop the Shylocks from skinning the innocent!

Posted by: tmorgan2008 | May 11, 2009 1:49 PM | Report abuse

The big issue that seems to go by unnoticed is the concept of punitive credit card policies versus incentive based credit card policies.

It seems like all the higher ups, from Congress, to the president, to the bankers, to Wall Street, can only comprehend punitive credit card policies.

I can understand incentive based credit card programs easily enough. I could design several programs that would benefit the american people while also increasing cash flow back to the banks from those with debt.

Instead, we have bankers punishing the american citizen, (and internationally as well) every which way they can. Until the citizens begin to actually coalesce around a cause, change won't be that great or that earth shaking.

Posted by: AlessandroMachi | May 10, 2009 1:32 PM | Report abuse

what if the c.c. companies were allowed to charge a maximum interest of twice the rate they pay?
what if c.c. companies were obliged to maintain the interest rate they offer consumers to sign up?
what if customer service was based in the country where the cards were issued?
what if every consumer stopped paying there monthly c.c. bill when the card issuer arbitrarily raised the rate?
what if the 'small print' clauses were banned because they are IMPOSSIBLE to read?
what if we all decided to boycott using credit cards until a fair policy is put in place?
i remember women across the country banning together and burning bras in public gatherings to bring attention to woman's rights issues. what if we organized the same type of protest for credit cards?
would enough people gather together and burn there cards and their bills?
is the fear of loosing a good credit score prohibiting us acting?

Posted by: boblesch | May 10, 2009 10:07 AM | Report abuse

Reforming the credit card industry is like trying to reform the crack dealers. At the end of the day, they're still selling you crack.

Just say NO to the addiction of easy credit. Pay cash or do without.

Posted by: DupontJay | May 10, 2009 9:56 AM | Report abuse

Yes! Let's rush another bill thru Congress so without serious examination! We need another 16 year old, who was attending church when a 'terroristic' email was 'sent' from his computer, arrested and imprisoned on the 'suspicion' of a crime.

If congressmen would stop letting 20 year olds draft these stupid laws, pass them without reading them, then common sense might return to the legislative process. But don't hold your breath, our Congress is only interested in getting themselves re-elected and don't give a damn about the constitution or freedom.

Posted by: joeblotnik49 | May 10, 2009 9:53 AM | Report abuse

Let me also point out, you said the worst case of anti-semitism since WWII? Lets see, your churches have been bombed,defaced,people killed,web sites set up to specifically target you,and none of these done by black people?? Please explain your logic.

Posted by: Bajiquan | May 10, 2009 9:52 AM | Report abuse

PoliticalCommentator says:"Its sad that after electing our first Black President, we're experencing our worst outbreak of anti-semitism since WWII and, worse, most of it is coming from a tiny but vocal and flaimingly racist portion of the Black community.'
You sound paranoid. If this is coming from a "tiny" portion of the black community, then what about the great majority that don't feel this way? President Obama when asked about addressing the "55%" black unemployment rate, ( yes I said 55%)in NY just for example, he included Hispanics in his reply of trying to include everyone needing help. Obama can't do EVERYTHING, especially in his first 100 days,and surely after what Bush left him with. If that tiny group you mention increased I'm sure you would hear something, and how do you know that tiny group has not been dismissed by the majority black community?

Posted by: Bajiquan | May 10, 2009 9:48 AM | Report abuse


American credit card companies charge an interest rate of about 10% PER MONTH in Brazil!

Armando Rozário - Cabo Frio, Brazil

Posted by: midia1 | May 10, 2009 7:21 AM | Report abuse

Who's in YOUR Wallet?

Barry is simply once again trying to get his foreign name on other people's legislation!

Congress is the ones who are acting!

Then, Wells Fargo-The Bank, needs a swift kick from Congress as well!

At $35 for a Insufficient Funds Charge, they are STEALING OVER 5 HOURS of Labor from anyone trapped near Minimum Wage;

for 5 SECONDS of Electronic Activity!

IF, processing a Late Charge is somehow that expensive, hire some of the People working for Minimum Wage, DOUBLE their Pay, and I bet they can still manage to process at least ONE AN HOUR!

$14 for a Late Charge is a little better, don't you think?

Posted by: SAINT---The | May 10, 2009 6:34 AM | Report abuse

"Is The One going to "fire" credit card CEOs? Watch out HMO CEOs, you're up next.

Posted by: JakeD | May 9, 2009 9:19 AM "


Good. Their snouts have been in the trough too long as it is. After that, Big Pharma, defense contractors, and whoever else need lining up.

They ought to be thankful it's not the tumbrels taking them to the public square.

No way to defend greed that rips off the poor, JakeD. Even a Republican could show some shame over what got us here, given how the Bushies kept slopping the troughs with our tax dollars.

Posted by: phoenixresearch | May 10, 2009 3:48 AM | Report abuse

I say reform is long overdue. The Bush bunch sided with the banks and credit card companies to the detriment of the citizens of this country. See KHMjr above. Personally I was forced into bankruptcy by the credit card companies. Once I retired I could no longer afford to pay the minimum on my cards. I was being charged 23%, 25% and 28% on the cards. I was only able to get out from under this burden by withdrawing tens of thousands of dollars from my TSP (401K) plan to pay off half of the indebtedness. The bankruptcy court judge wrote off the rest. I am mad as hell that now these predatory lenders are getting TARP money. They should be awash in cash from charging those loan shark rates and fees. They don't need bailing out. If they do, let the bastards go under!

Posted by: PoseyD | May 10, 2009 2:51 AM | Report abuse

In the Bush years the credit card industry got two very sweet deals. One was a very high maximum interest rate and the other were changes to the bankruptcy laws. These bits of legislation were to help bankers. Look around and you can see it did not work.

I think it is time to repeal the Bush bankruptcy laws and to set a maximum credit card interest rate at 12.5% above the Fed rate that the credit card companies have to pay, capping at 19.5%. Both changes will bring us to a level of sanity that is needed for the average taxpayer. Don't worry about the credit card companies - they are getting cheap money with the current Fed rates and we can always bail them out again.

Two other changes might also be welcome to the average taxpayers. The first would be to allow credit card (and similar) interest to be tax deductible for the next remainder of Obama's first term. That, along with restricting interest rates, will help people get out of debt.

The other would be to establish a medical bankruptcy that would be available when medical bills exceed a certain level of the household income. The change here would be to allow it to be shown on a person's credit report for only 3 years.

Posted by: KHMJr | May 10, 2009 2:15 AM | Report abuse

If you want to cut through all the doubletalk, please check out my Chase Bank Credit Card Industry protest blog.

In a nutshell, all the higher ups have chosen punitive methods of reducing credit card debt when incentive based methods would actually have started working by now.

Posted by: AlessandroMachi | May 9, 2009 8:40 PM | Report abuse

It is good to seen an administration taking the side of its citizens against the Masters of the Universe whose greed drove this country into a ditch.

Posted by: blaneyboy | May 9, 2009 1:10 PM

Hey blaneboy:
Are you hearing voices or picking up radio transmissions from Jupiter on your fillings? You sound delusional.

Those greedy bums are mostly still squatting like Turkey Buzzards in Congress and the Senate with a D after their names. (Not that Republicans are not equally to blame.)

Posted by: Bubbette1 | May 9, 2009 7:06 PM | Report abuse

Quoting a previous story on this subject: "The American Bankers Association continues to have real concerns that the bill passed by the House Financial Services Committee today will have a negative effect on lenders' ability to offer reasonably priced credit to consumers and may make matters worse for the broader economy," Kenneth J. Clayton, a senior vice president of the association, said in a statement.

“Reasonably priced credit to consumers”? These institutions get taxpayer money (read “our money”) at no or negligible interest, then rape us at 33.99% interest, tack on fabricated fees and charges and then have the unmitigated gall to say that their ability to offer “reasonably priced credit to consumers” would be injured if controlled and regulated?! These greedy bottom-feeding scumbags are making the responsible credit card holders pay for their losses having issued credit cards to the irresponsible and the family goldfish. They feel as if they are victims for having opened the vault and turning their backs now believing their bad judgment gives them license to steal from whomever remains.

They laugh at government regulation, buy political influence and act with impunity knowing that there will be no consequences for their behavior. Perhaps it’s time we all simply stop paying our credit card bills until these thieves in $5,000 suits drop the interest rate to a flat 8% and discontinue all fees. Rest assured when the revenue ceases from the consumer they will capitulate or will be no more.

That is the only power, direct economic power, that we can collectively excercise to put an end to the unbridled, unregulated greed of the financial institutions as government has not only refused to act but rather aids and abets. As to those in the pockets of corporate America who supposedly represent us we can eliminate them by voting for the independant candidates whose campaigns are financed by their friends and neighbors and not vote for anyone with an R or D following their name who has held any previous elected office.

Posted by: bfjackjernigan | May 9, 2009 3:58 PM | Report abuse

"Part of the reason that I bought the stocks is because the banks could do lots of nasty things, like huge rate increases, and outrageous fees for trivial things like being an hour late on getting a payment in. I don't like it that the Government is taking aim at my rice bowl, that my own Government is setting out to harm me." (rcycan)

Gotta love the internet - allows for anonymous voicing of opinion.

The credit card industry agrees with rcycan...the government is taking aim at their rice bowl too.

The government's job - as stated clearly in the Constitution - is to protect it's citizens "from enemies both foreign and domestic." The credit card companies and rcycan cannot be allowed to use predatory practices to augment their rice bowls while destroying everyone else in the process. As such, rcycan and the credit card cartel are domestic enemies and must be dealt with harshly.

Such selfish, self-serving corporatist drivel is clearly the problem we face in America. When called to the mat on their criminal behavior, corporatists look at you with that incredulous look of entitlement - "this is how we do business" they say. "Don't get in our way of screwing everyone else over so we can fill our rice bowls" while hard working citizens are screwed over.

Profit above all - and don't even mention corporate social responsibility. Surely these people were paying attention in college as this IS a 101 level concept re: ethical business practice. Profit above all - the corporatist mantra as decreed by Milton Friedman, the disciple of the corporatist agenda. Clearly rcycan either was sleeping during that class, or he is just selfish and only cares about his own rice bowl.

Taking any guesses as to which is the case?

rcycan and the corporatists can all shove it up their bottom-lines. "This is how we do business" should no longer be acceptable to the extent that we allow the citizenry to be buried by corporatist predators.

Posted by: pcw5150 | May 9, 2009 3:04 PM | Report abuse

So, yesterday I got a letter in the mail from Bank of America telling me that they are adding additional or increasing transactions fees for both domestic and foreign transactions. Guess BofA isn't listening to President Obama. It's time to get that legislation passed!

Posted by: marmac5 | May 9, 2009 3:01 PM | Report abuse

you heaven on earthers are just usefull idiots for dictators like obama/pelosi, read Orwells 1984, fahrenheit 451, Alinskys rules for radicals, cloward-piven strategy, before they ban 1st, 2nd, 10th & 14th amendments and enslave you morons, what do you think the civilian defense plans, takeover of autos/banks, forced unionization, global warming scam of cap&trade then international law, smart grids, pandering to other dictators, homeland security memo, etc. etc mean for our freedom or do you just want to give it away for a better credit card rate?

Posted by: freewill1 | May 9, 2009 2:40 PM | Report abuse

I don't believe the credit card issuers' assertion that reform will make it more difficult for them. It was decades ago that credit card companies moved their billing operations to states that allow extremely high interest charge rates (e.g., Delaware) or no restrictions at all (e.g., South Dakota). Issuers are getting money at almost zero interest rates and when they charge credit card holders 13-16 percent or more for balances carried, I believe the issuers are really ripping off their customers. I would like to see an article which provides readers with information such as an in-depth analysis of interest rates being charged, percent of bad accounts or vary late payments, and what the credit card companies are making from credit card operations.

Posted by: richardtag | May 9, 2009 2:40 PM | Report abuse

"Americans know that they have a responsibility to live within their means . . . ."

After making statements like that, doesn't the White House worry about lightning striking nearby?

Posted by: rbroster | May 9, 2009 2:27 PM | Report abuse

Credit cards have just been a conspiracy of theft by the banking industry for about 25 years. The most shocking thing about the situation is that the government abandoned the general population to these predators during the administration of President George W. Bush.

It is good to seen an administration taking the side of its citizens against the Masters of the Universe whose greed drove this country into a ditch.

Posted by: blaneyboy | May 9, 2009 1:10 PM | Report abuse

I own some stock in a couple of big credit card issuers. Part of the reason that I bought the stocks is because the banks could do lots of nasty things, like huge rate increases, and outrageous fees for trivial things like being an hour late on getting a payment in. I don't like it that the Government is taking aim at my rice bowl, that my own Government is setting out to harm me.

Posted by: rcycan | May 9, 2009 1:03 PM | Report abuse

Credit cards? Don't get any and make sure to inform your credit reporting bureau to close any credit inquiries unless they were requested by you. No more card offers in the mail, no more credit cards tempting you to over spend. Don't be suckers for corporate bankers ripping you off for your lifetime of hard work.

Posted by: clairevb | May 9, 2009 12:53 PM | Report abuse

It is nice of Obama to protect consumers from being taken advantage of by credit card companies and banks. Will he do anything for the consumer when it comes to 1/3 of most of our incomes being taken from us before we even see--by taxes? At least with credit cards we have a choice. With income taxes, the only thing we did wrong was work and make money!

Posted by: bendex7 | May 9, 2009 12:40 PM | Report abuse

So he wants it - now - don't bother to debate, read, or otherwise discuss - it's THAT important- next week he'll be threatening catastrophe if it's not on his desk by Memorial Day. Are any of you blind worshipper's beginning to see a pattern here? We're being had big time by a control egomaniac who's out to destroy the United States of America. And I swear some of you are happy to see it happen.

Posted by: sandynh | May 9, 2009 12:31 PM | Report abuse


Complete deregulation?! You've never read the small print from credit cards?

Posted by: JakeD | May 9, 2009 11:21 AM | Report abuse

The one credit card that the Nation needs to control is run by the Federal Reserve and Treasury. Obama and his staff and all of the Congressman and Senators that voted for the bail-out bill without reading it need mandatory debt counseling. The government is printing money 24/7 to pay for this foolishness. We have no idea what they are doing, it is all cloaked in secrecy and requests for transparency are denied on the grounds of national security. Our government is out of control.

Posted by: Bubbette1 | May 9, 2009 11:06 AM | Report abuse

I made a comment concerning the WP's lack of respect for its Jewish American readers.

Mike's removing of my comment proves it.

The WP doesn't even realize how casual their anti-semitism is.

According to the WP and its ilk, Jews aren't allowed to get upset when they're treated as less than human.

The WP apparently stands by the comments of the neo-Nazi's on its comment boards that blame every problem on earth on Jews.

I'm sure someone in some newspaper or newsprogram will do an exposee on the neo-nazi's that post anti-semitic Hamas propaganda on the WP boards, that the WP allows such comments to remain, and that the WP removes any comments that complain about the WP failing to enforce its hate speech policy.

The WP shows its true colors by what it does with this situation.

Rather than removing anti-semitic posts, they remove posts complaining about them.

That stinks.

Posted by: PoliticalCommentator | May 9, 2009 10:51 AM | Report abuse

I wishthe president the best of luck.

He's lost an enormous amount of support in the Jewish-Americann community for not doing more to disown the rabid anti-semites of the extreme left wing of the Democratic Party.

I used to be one of the President's biggest boosters.

Now I'm wondering if I and my people were used for our support and our money and they trested like dirt and thrown to the Nazi's once he was elected.

The vile anti-semitism allowed on these comment boards is frightening and sickening.

I feel like a second class citizen in my own country.

That's a horrible way to feel.

Its obvious the WP doesn't care about its Jewish readers.

Its sad that after electing our first Black President, we're experencing our worst outbreak of anti-semitism since WWII and, worse, most of it is coming from a tiny but vocal and flaimingly racist portion of the Black community.

Why does't the Black community disown them, just like the President disowned Rev Wright?

Was his claim about fighting racism of all kinds against all groups just all a fancy con-game on the part of President Obama and his supporters?

For America's sake, I sure hope not.

I feel used, and I fear for the safety of my wife and children.

That's neither an over-reaction or a joke.

Its getting really scary out there.

It shouldn't be that way in 21st century America.

Posted by: PoliticalCommentator | May 9, 2009 10:25 AM | Report abuse

It is time to reinstate reasonable regulation in the credit card industry and many other industries. We have seen the results of the last eight years of complete deregulation. Depression caused by the greed of the rich to get richer.

I appreciate President Obama's desire to make things more fair for working people and to make it so that ordinary working people have a fair chance again.

Posted by: tinyjab40 | May 9, 2009 10:13 AM | Report abuse

Is The One going to "fire" credit card CEOs? Watch out HMO CEOs, you're up next.

Posted by: JakeD | May 9, 2009 9:19 AM | Report abuse

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