Obama Pledges New Credit Card Rules
STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. I'm Steve Inskeep in Detroit.
RENEE MONTAGNE, host:
And I'm Renee Montagne at NPR West. President Obama plans to meet at the White House today with credit card executives from more than a dozen banks. Lawmakers on Capitol Hill see that as a sign that their longtime efforts to overhaul the credit card industry may be gaining strength. They're ramping up their work on what's known as the credit card holders bill of rights. NPR's Audie Cornish reports.
AUDIE CORNISH: While bill writers at the House Financial Services Committee were reviewing their credit card holders bill of rights, the very consumers they're trying to protect were downstairs in the north gift shop using credit.
Mr. SHAWN LAWSON (Tourist): Bought a commemorative plate, deck of cards, and a Christmas ornament.
CORNISH: On credit cards.
Mr. LAWSON: On American Express.
CORNISH: Shawn and Jeanette Lawson are from Charleston, South Carolina. They say they don't need any help with their credit cards, thank you very much. They pay their bills on time and they don't need help from Congress. Although a little more information from the credit card companies probably wouldn't hurt.
Mr. LAWSON: I think that disclosure is good. Regulation, I don't know.
CORNISH: Disclosure and regulation are just what Congress is working on. In the House, New York Democrat Carolyn Maloney has sponsored a bill that would force credit card companies to be more forthcoming about rate changes, fee hikes and payment requirements.
Representative CAROLYN MALONEY (Democrat, New York): A credit card is basically a contract. But as it stands now, the issuer gets to make all the decisions. And what this bill does is basically level the playing field between the consumer and the issuer in a more fair and balanced way.
CORNISH: Maloney's bill bans the marketing of cards to teens. It requires card issuers to give consumers 45 days' notice before raising interest rates. It also says customers can't be charged for interest on debt they've already paid off.
Much of this mirrors new regulations already set forth by the Federal Reserve and set to go into effect in July 2010. Maloney says that's not enough.
Rep. MALONEY: It is not codified into law. This means that these protections can be changed. They can be altered. They can be postponed. For these consumer protections we need the reality of a law to have it in place to protect them.
CORNISH: Opponents say consumers don't need protecting.
Representative JEB HENSARLING (Republican, Texas): I fundamentally reject -fundamentally reject that consumers are too foolish to understand the credit cards that they accept in a competitive market.
CORNISH: Jeb Hensarling is a Republican from Texas. He said the legislation would limit a bank's ability to set customer charges based on risk.
Rep. HENSARLING: Ultimately this is a bill that will restrict the availability of credit to some borrowers and frankly make those who pay their bills on time, which is roughly half of America pays their bill in full at the end of each month, it will make those subsidize the people, the universe of people who don't.
CORNISH: The Senate is working on a similar, somewhat broader bill. It says credit card companies can't raise a customer's rates if the customer defaults on debt owned to other lenders. Last year, the House passed a bill, but the Senate never took it up for consideration. This year, with support from the White House, Democrats say the momentum may be on their side.
Audie Cornish, NPR News, the Capitol.