DES MOINES, Iowa – Democrat Barack Obama called for new restrictions on "predatory" credit card companies he says deceive consumers into piling up massive debt they have little hope of repaying.
"The truth is, our middle-class families are not going to be secure so long as they can't get out of debt," Obama said Monday, sharpening the populist rhetoric of his presidential campaign. "If we're serious about stopping Americans from falling deeper in debt, we've got to crack down on predatory credit card companies that are pushing them over the edge."
Obama pointed to studies showing that consumers have an average personal debt of more than $8,000, a load driven higher by credit cards. He said soaring credit card debt could turn into a crisis as big as the one in the subprime mortgage industry.
"The larger risk is that what's happening in the housing market could lead to a slowdown in the entire economy," he said.
The Illinois senator made his comments in a statement and in a discussion with debt counselors and consumers who have struggled with credit card debt.
Obama's "credit card bill of rights" would force credit card companies to give consumers the option of dropping out of an agreement if the companies raise interest rates. It would ban increasing rates on past debts and prohibit charging interest rates on transaction fees. He would also force additional disclosures by credit card issuers of terms of the agreement.
"I've seen many Americans who have been driven into financial ruin as a result of all of this," said Obama.
He spoke as he opened his latest campaign swing in the state where precinct caucuses traditionally launch the presidential nominating season, and where polls find him in a dead heat with Hillary Rodham Clinton. Both have portrayed themselves as champion of the middle class.
Obama did so again by accusing credit card companies of deceptions.
"Many credit card companies are tricking Americans into agreements they can't afford because that's how they make big profits," he said. "Well, no company's bottom line should come before what's right for the American people."
He said many consumers are squeezed twice, with credit card debt forcing them into bankruptcy, where the odds are also stacked against them.
Obama also spoke of his opposition to an overhaul of bankruptcy laws that he said protects credit card companies more than consumers.
"Every American has a responsibility to pay what they owe, but we need to make sure that what they're paying is fair, and we've got to do more for those Americans who aren't able to climb out of debt and actually have to declare bankruptcy," he said, promising reform of bankruptcy laws if elected president. He said he opposed a 2005 bankruptcy bill because it protected lenders while "preventing middle-class Americans from getting back on their feet after a crisis — even if they've suffered an illness."
He said much credit card debt comes from consumers who have been forced to use credit cards to pay for medical costs.