WASHINGTON – President Barack Obama says he will push for a law to provide "strong and reliable" protections for the millions of Americans who have credit cards.
The president on Thursday outlined his priorities after meeting with chief executives of the credit-card lending industry.
Obama said he wants legislation that will prevent consumers from facing a sudden, surprising rise in fees. He said credit-card companies must publish their forms in plainspoken language. The president said companies must make it easier for people to do comparison shopping and said there must be greater enforcement so that violators feel the "full weight" of the law.
Both the House and Senate are working on versions of such a law.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — President Barack Obama is pushing to rein in costs for millions of Americans who use credit cards, an appeal to consumers as many struggle to pay their bills.
But the banking industry is warning that Obama's push for legislation could backfire, restricting lenders and making less credit available to Americans during the economic crisis.
Obama was meeting with leaders of the credit-card industry Thursday, a session the White House said would be an "open and productive conversation."
"The president believes new rules of the road for the credit card industry are needed," Obama senior adviser Valerie Jarrett said ahead of the president's planned session at the White House with executives from the nation's top credit-card companies.
Obama and some congressional leaders are particularly focused on what they consider to be abusive and deceptive practices that squeeze people into paying much higher fees or interest rates than anticipated. Both the House and Senate are considering a credit card "bill of rights" to limit the ability of credit-card companies to raise interest rates on existing balances and to require greater disclosure.
At issue is how to protect consumers, particularly in a severe economic downturn, while not imposing the kind of rules that could make it harder for banks to offer credit or that put credit out of reach for many borrowers. Industry advocates are wary of those consequences and hopeful Obama will listen.
Kenneth Clayton, senior vice president for card policy at the Americans Bankers Association, said the concern is that new legislation may make economic matters even worse by shrinking lenders' ability, resulting in "less credit available to vast numbers of Americans" at just the wrong time.
The Federal Reserve has already ordered new rules, to take effect in July 2010, that are designed to enforce a host of new consumer protections.
On Thursday, Sen. Chuck Schumer, D-N.Y., a member of the Finance Committee, and Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, wrote a letter asking the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration to use their emergency powers and put next year's planned rules in place immediately.
"Congress is working on legislation to strengthen these rules and provide additional protections for consumers," the senators wrote. "As Congress works to pass this legislation, and before your rules become effective, issuers continue to operate using unfair and deceptive acts and practices."
Almost 80 percent of American households have credit cards. The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008, according to CreditCard.com, an online marketplace designed to link consumers and card issuers.
The White House says Obama is aware of the importance that credit cards hold in many families, particularly as a last option during hard times.
White House economic adviser Larry Summers said over the weekend that the administration wants to curb pitches that addict people to plastic.
"Individuals are going to have to save more. That's why savings incentives are so important," he said. "That's why we need to do things to stop the marketing of credit in ways that addicts people to it and so that our households are again saving and families are again preparing to send their kids to college."
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