Barack Obama (D)
Chris Dodd (D)
WASHINGTON (Legal Newsline)-U.S. President Barack Obama plans to target credit card companies he says are taking advantage of unsuspecting consumers by charging high interest rates, a senior adviser said Sunday.
White House economic adviser Lawrence Summers said the president plans to crackdown on banks and credit card companies that engage in a range of deceptive practices.
“He’s going to be very focused, in a very near term, on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high interest rates that they wouldn’t have paid if they knew what that they were getting themselves into,” Summers said in an appearance on NBC’s “Meet the Press” program.
Summers, director of the White House National Economic Council, and other administration officials are scheduled to meet Thursday with top credit card company executives to discuss a possible industry overhaul.
The meeting comes as congressional lawmakers are considering legislation that would restrict credit card companies’ ability to raise interest rates on existing balances and require greater disclosure of terms.
“We need to do things to stop the marketing of credit in ways that addict people to it,” Summers said. He also said Americans need to save more of their money than they do currently.
“That’s why we need to do things to stop the marketing of credit in ways that addicts people to it – so that our households are again saving, and families are again preparing to send kids to college, for their retirement, and so forth,” he said.
In a statement, Senate Banking Committee Chairman Chris Dodd, whose committee approved Senate Bill 414 last month to overhaul credit card company practices, said he was glad to have the president’s support.
“We will only fully recover from this economic crisis when we put an end to the abusive practices that continue to drive so many Americans deeper and deeper into debt,” said Dodd, D-Conn. “Reforming the way credit card companies do business is the right the thing to do for both our families and the economy.”
The Senate legislation would require that credit card statements be mailed at least 21 days before the bill is due and forbid card issuers from changing the terms of a contract as long as the cardholder remains current on payments.
The bill would also prohibit companies from issuing credit cards to people under 21-years-old unless the application for credit is signed by a parent or guardian who can repay the debt, or the applicant completes a financial literacy course certified by the U.S. Treasury Department.
From Legal Newsline: Reach staff reporter Chris Rizo at firstname.lastname@example.org.