Executives from credit-card issuers, including Bank of America and American Express, are set to meet with President Barack Obama today in their fight against new limits on fees and interest rates.
They aren’t likely to make much headway: Obama is pressing for consumer protections that go beyond proposals approved yesterday by a US House committee and rules issued last year by the US Federal Reserve.
As unemployment and unpaid credit-card bills rise, card issuers are under fire for policies that impose large late fees and boost interest rates on delinquent customers. Banks, reeling from the recession and credit crunch, say proposed restrictions will raise consumer costs, limit credit availability, and ultimately hurt more borrowers than they help.
“It means less credit available to vast numbers of Americans at the very wrong time,” said Ken Clayton, senior vice-president of card policy at the American Bankers Association in Washington.
Industry leaders sought the White House meeting as they confront an outpouring of anger from cardholders and the US Congress. The executives are likely to hear from Obama about “some of the deceptive practices that we’ve seen,” White House spokesman Robert Gibbs said.
Credit-card issuers “are making a substantial amount of their money off fees that people don’t understand and engaging in things that may be a little bit below the line,” Austan Goolsbee, Obama’s senior economic adviser, said.
Yesterday, the US House Financial Services Committee voted 48-19 to support a package of new restrictions, including fee and rate limits. The full US House could vote on the measure as soon as next week, and the US Senate is considering a similar bill.
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“It is time to put the government on the side of consumers,” Representative Luis Gutierrez, an Illinois Democrat, said. US Treasury Secretary Timothy Geithner and economic adviser Lawrence Summers are to join Obama at the meeting.
“The president believes new rules of the road for the credit-card industry are needed,” senior White House adviser Valerie Jarrett said in a written statement. “We are also working with the US Congress on a legislation that will promote simplicity, require transparency, demand fairness and ensure accountability.”
The industry is to be represented by executives from 13 companies, including Barclays, Capital One Financial, Citigroup, Discover Financial Services, HSBC Holdings, JP Morgan Chase, US Bancorp, USAA Federal Savings Bank, Wells Fargo, Visa. and MasterCard. American Bankers Association President Ed Yingling is also scheduled to attend.