Credit card executives meeting with President Barack Obama argued that rules proposed by the Federal Reserve are adequate to protect consumers, but Obama believes more should be done, the White House said Thursday.
"The industry laid out a case that what the Fed is doing is enough," White House spokesman Robert Gibbs told a briefing following Obama's meeting with the credit card officials.
"The president believes that there are things that can be done and should be done beyond what the Fed has proposed to protect the consumers," he said.
Obama said Thursday his administration is determined to get a credit-card law that eliminates tricky fine print, sudden rate increases and late fees that give millions of consumers headaches.
"I trust that those in the industry who want to act responsibly will engage with us in a constructive fashion, and that we're going to get this done in short order," Obama said, delivering a pointed message to leading executives of credit-card issuing companies seated at his side.
Both the House and the Senate are pursuing bills to give consumers greater protections.
Obama said his economic advisers will examine the various proposals and work with Congress and the industry, but he made clear he intends to sign a law.
At issue is how to protect consumers, particularly in a severe recession, while not imposing the kind of rules that could make it harder for banks to offer credit or put credit out of reach for many borrowers.
Industry advocates are wary of those consequences and hopeful Obama will listen.
Obama outlined the principles he wants in any legislation: Protections so that consumers won't face sudden, surprising jumps in fees; requirements that companies publish their forms in plainspoken language, with no more fine print; the availability of customer-friendly comparison shopping on credit-card offers; and greater enforcement so that violators feel the "full weight" of the law.
The president also acknowledged the importance of credit cards; almost 80 percent of U.S. households have one.
Credit cards often serve as a vital source of liquidity, both for individuals and small businesses.
Executives from Bank of America, American Express, Citigroup, Wells Fargo , JPMorgan Chase, Capital One Financial, Visa Inc and MasterCard Inc were among thoseat the White House.
"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.
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."