by Mark Silva
President Barack Obama, calling for Congress to crack down on consumer abuse by credit card companies,
Congress should outlaw sudden interest rate hikes, unfair penalties, and hidden fees, the president said today, and it should do so by Memorial Day.
"The gears of America's economic engine are slowly beginning to turn,'' Obama said in his weekly Internet and radio address today.
The Obama administration says there are signs that the economy is beginning to recover from recession -- with unemployment reaching 8.9 percent last month, its highest since 1983, the job losses reported in April were fewer than those the month before and the lowest in six months. Yet some predict it will reach 10 percent before it turns around.
And, as banks return to lending money, the president says, the government should ensure that predatory practices in consumer credit are prohibited.
"Americans know that they have a responsibility to live within their means and pay what they owe,'' Obama said today. "But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties, and hidden fees that have become all-too common in our credit card industry.''
See the address above and the text below:
"Good morning. I want to briefly share some news about our economy, and talk about the work that we're doing both to protect American consumers, and to put our economy back on a path to growth and prosperity.
"This week, we saw some signs that the gears of America's economic engine are slowly beginning to turn. Consumer spending and home sales are stabilizing. Unemployment claims are dropping and job losses are beginning to slow. But these trends are far from satisfactory. The unemployment rate is at its highest point in twenty-five years. We are still in the midst of a deep recession that was years in the making, and it will take time to fully turn this economy around.
"We cannot rest until our work is done. Not when Americans continue to lose their jobs and struggle to pay their bills. Not when we are wrestling with record deficits and an over-burdened middle class. That is why every action that my administration is taking is focused on clearing away the wreckage of this recession, and building a new foundation for job-creation and long-term growth.
"This past week, we acted on several fronts. To restart the flow of credit that businesses and individuals depend upon, we completed an unprecedented review of the condition of our nation's largest banks to determine what additional steps are necessary to get our economy moving. To restore fiscal discipline, we identified 121 programs to eliminate from our budget. And to restore a sense of fairness to our tax code and common sense to our economy, I have asked Congress to work with me in closing the loopholes that let companies ship jobs and stash profits overseas - reforms will help save $210 billion over the next ten years.
"These important steps are just one part of a broad effort to get government, businesses and banks to act more responsibly, so that we are creating good jobs and making sound investments instead of spending recklessly and padding false profits. Because American institutions must act with the same sense of responsibility and fairness that the American people aspire to in their own lives.
"Nowhere is this more apparent than in our credit card industry. Americans know that they have a responsibility to live within their means and pay what they owe. But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties, and hidden fees that have become all-too common in our credit card industry. You shouldn't have to fear that any new credit card is going to come with strings attached, nor should you need a magnifying glass and a reference book to read a credit card application. And the abuses in our credit card industry have only multiplied in the midst of this recession, when Americans can least afford to bear an extra burden.
"It is past time for rules that are fair and transparent. That is why I have called for a set of new principles to reform our credit card industry. Instead of an "anything goes" approach, we need strong and reliable protections for consumers. Instead of fine print that hides the truth, we need credit card forms and statements that have plain language in plain sight, and we need to give people the tools they need to find a credit card that meets their needs. And instead of abuse that goes unpunished, we need to strengthen monitoring, enforcement, and penalties for credit card companies that take advantage of ordinary Americans.
"The House has taken important steps toward putting these principles into law, and the Senate is poised to do the same next week. Now, I'm calling on Congress to take final action to pass a credit card reform bill that protects American consumers so that I can sign it into law by Memorial Day. There is no time for delay. We need a durable and successful flow of credit in our economy, but we can't tolerate profits that depend upon misleading working families. Those days are over.
"This economic crisis has reminded us that we are all in this together. We can't prosper by putting off hard choices, or by protecting the profits of the few at the expense of the middle class. We are making steady progress toward recovery, but we must ensure that the legacy of this recession is an American economy that rewards work and innovation; that is guided by fairness and responsibility; and that grows steadily into the future.
"Thanks.''
Comments
Reme mber Treasury Regulation Z?
Regulators can make them stop by regulation.
Particularly where they are being kept afloat by taxpayer money.
Why try to push it off on Congress?
Banks are shameless greedy ungrateful black holes for taxpayer funds.
Everytime Joe Sixpack Voter gets hosed by Capital One or Visa, don't you think eventually he will figure this out and vote against the party in power?
Electorate can connect those dots.
In fact, if things don't improve, it will be more than an issue of being hosed by the credit card units of the banks.
Joe will wonder why the banks themselves have not been nationalized, since he's paying to keep them afloat.
Paying with tax dollars and paying with abusive interest rates and fees.
Wake up Democrats.
Posted by: ornery | May 9, 2009 9:21 AM
If Obama's serious about "rip offs," perhaps he'll put a stop to his own administration's rip offs. Such as the billions in pork he signed onto with the so-called "stimulus" (aka "Porkulus") package. And he should disclose to the public the true future costs of his profligate spending. When it comes to rip offs and transparency, perhaps Mr. Obama should (for once) practice what he preaches.
Posted by: Rodney Daingerfield | May 9, 2009 9:29 AM
For too long the financial sector of our economy has dictated economic policy and look where it has landed our nation !! In a ditch, with jobs being quietly moved to foreign countries and our ranks of the unemployed worker, swelling. There must be restrictions returned to the financial sector's practices, that would prohibit, in very clear and precise terms, that gouging, fraud and deception will not be tolerated and the persons engaged in such practices, will go to jail !! Those practices, from blindsiding mortgage seekers to loan-sharking were common, in this present meltdown. To hoodwink borrowers, hiding hidden rate increases, that do not appear, until the mortgage is well into operation, is a punishable offense and punishment should be meted out, immediately !! As for the loan-sharking by banks and credit card companies, guidelines must be rewritten, to inform these Corporations, that they are there to serve the public, not to rip them off !! !0 to 15% charge, on loaned money is exorbitant and criminal !! How can these " pillars of the community " abuse the members of these communities so blatantly and callously ?? In a word, GREED and they make no bones about it !!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.
Posted by: Don Fitzgerald, America | May 9, 2009 9:58 AM
Congress has dragged their feet for so long on this allowing the credit card companies to change their agreements before any new law will be passed . Now most card issuers have changed the way interest will be charged by tieing the interest rate to the prime rate plus 19.99% to as much as 29.99%. The fix is in and once again the consumer loses .
Posted by: Leonid Radzvilar | May 9, 2009 10:24 AM
You can make the fine print on a credit card application an inch tall and at the reading comprehension level of a fifth grader, it won't matter. Too many people are ignorant to read the details no matter how easy it is. Many of the people who typically get taken advantage are desperate for the credit and will sign their names to anything regardless of the terms.
Posted by: Tom Switzer | May 9, 2009 11:20 AM
Think the Drug Companies rip off on the price of drugs would be more important,as Congress sure Tip Toes around the issue, must be one of their main sources of political donations.
Posted by: Inky | May 9, 2009 11:29 AM
too little too late?
Posted by: chidre | May 9, 2009 11:55 AM
New Democratic Congress is showing early signs of indifference to their base that so characterized the Congress of Tipsy O'Neill.
And you know what happened in 1994.
Posted by: ornery | May 9, 2009 12:14 PM
Democrats controlled Congress in 70s and 80s when they let the banks headquarter the credit card units at some branch in North Dakota where there were no usury laws.
Also allowed Reagan to pass tax code revision eliminating interest deductions for CC interest.
Congress is backsliding really fast.
Difference is: it is so much easier to catch them in the act, what with the interconnected configuration of tubes & nets.
Posted by: ornery | May 9, 2009 12:21 PM
As long as tax payer funds and FDIC deposits are at risk, government should and will step-in and command responsible lending. Sending 10k checks in the mail to consumers with low credit ratings for years and charging 30% is criminal if it is backed by insured deposits.
Let the loan sharks be loan sharks free of government interference, just not with our money.
Posted by: Jeff Gilfillan | May 9, 2009 12:24 PM
Credit card companies are addicted to fees. I used my card for a small purchase, under 25.00. I got the bill and paid it promptly. The next month I got a bill for interest of $1.00 on that purchase. I went to the bank that issued the card and found out like any home or auto loan now, you MUST call the credit card company to get a pay-off amount and pay it immediately. Otherwise you will owe interest from the day you make your purchase...even if you pay it off in less than 30 days. So I paid my $1.00 and am waiting to see if they charge me 50 cents on the few days last month I had the $1.00 balance. Maybe not though, the clerk called to find out how much my pay-off amount was that day.
Posted by: lochnessmonster | May 9, 2009 1:55 PM
Breathtaking ignorance of monetary policy, and I'm an expert on that!
Poor folk need credit cards to buy big screen TVs.
Can't buy them with food stamps (at least directly).
Poor must be taught how to budget their money.
Just consider credit card as a kind of electric cattle prod.
Posted by: Milton Friedman | May 9, 2009 2:26 PM
BANK OF AMERICA IS RAISING RATES JUST TO MAKE SURE THEY CAN MAXIMISE BEFORE ANY NEW LAW GO INTO EFFECT,
Posted by: JAME STOUT | May 9, 2009 3:37 PM
Tom,
You could make the reading at the level of the 5th grader, but that still wouldn't cover have the loons.
Ornery,
Tip O"Neill resigned Congress in 1987. He died in 1994. It was Jim Wright who was Speaker when the GOP took Congress in 1994.
Consumer Iterest was disallowed in the tax reform act of 1986 in exchange for lower tax rates. Imagine the credit card crisis today if that interest were deductible?
Posted by: Terry | May 9, 2009 4:34 PM
Tipsy gave away the store to Reagan.
When voters figured out Dems had become no different than Replicans, the latter were able to take control.
Two Replican lardasses, Gingrich and Hastert, took the place of lardass O'Neill.
Whether you like Pelosi and Reid or not, you knew they were not having cocktails and swapping off color jokes with Bush the way O'Neill did with Ronnie.
Posted by: ornery | May 10, 2009 9:20 AM
Ornery,
O'Neill and Reagan were able to put aside their policy differences and be civil towards each other.
Even Gingrich and Clinton could get along.
On the other hand, Reid and Pelosi have a down right hatred from President Bush. It is just typical liberal hatred.
Posted by: Terry | May 10, 2009 12:42 PM
T, your argument proves too much, as the Brits like to say.
Tipsy and Clinton were give-away guys.
Clinton was essentially just as much a "new Rep" as a "New Democrat".
Dems figured this out, finally, in the last primary:
A bi-racial state senator from Hyde Park is now President as a result of their having figured out how bad Clinton and Clintonism were.
Of course, his having pardoned Marc Rich was a help.
Ford/Nixon, Clinton/Rich, Bush/Scooter--they never learn.
Posted by: ornery | May 11, 2009 9:57 AM
President Obama signs the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, marking a turning point for American consumers and ending the days of unfair rate hikes and hidden fees. Here are the details… http://pfx.me/e4
Posted by: Credit Desk | May 22, 2009 3:20 PM