Obama to Tackle High Credit-Card Rates, Abuses

WASHINGTON -- President Barack Obama will soon turn his attention to high credit-card rates, giving a potential boost to congressional efforts to put limits on the industry.

The president is "going to be very focused, in a very near term, on a whole set of issues having to do with credit-card abuses," White House economic adviser Larry Summers said on NBC's "Meet the Press" Sunday. He said abuses include charging consumers "extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into."

Summers is scheduled to meet with the heads of several of the largest U.S. credit-card issuers at the White House on Thursday.

Democratic lawmakers have already begun advancing legislation to curb certain credit-card fees and other practices. It is unclear whether, or how, the White House's efforts might differ from the measures being pushed by Rep. Carolyn Maloney of New York and Sen. Christopher Dodd of Connecticut.

White House spokeswoman Jen Psaki on Sunday declined to say what specific measures the administration might take. "Addressing abuse in the credit-card industry and standing up for consumers is a priority for the president and his economic team, and we look forward to working with Congress on these issues," she said.

Banks have come under increasing pressure over raising their credit-card rates in recent weeks. Consumer groups are particularly critical of those that raised rates on some existing card holders even as the banks received federal bailout funds. Banks have said credit-market conditions and changes in borrowers' credit scores necessitated the increases.

Consumer advocates want legislation that would limit rate increases on existing balances and require card companies to provide more information on their rates.

In December, the Federal Reserve finalized new rules that limit some credit-card rate increases. Those rules don't take effect until July 2010, however. Legislation pending in Congress would accelerate implementation of the new restrictions.

The banking industry has said the White House and Congress should wait for the Fed's new rules to take effect before taking any additional action.

"The [banking] industry understands the concerns about credit cards, but the administration should fully recognize the impact of the Federal Reserve Board regulation, which is one of the strongest consumer- protection regulations ever adopted," Edward Yingling, president of the American Bankers Association, the banking industry's lobbying group, said Sunday.

"As we go forward we need to be careful about piling on rules that very much may have the impact of restraining the availability of credit," he said.

Read the full report from the Wall Street Journal.