Card Issuers Brace for Stern Warning; Obama to Press Executives to Adopt New Rules or Face Action by Congress
President Obama will meet directly with credit card executives this week and plans to tell them to support strict measures that curb lending abuses or face the wrath of angry consumers and a determined Congress, according to banking industry officials.</br></br>The heads of the credit card divisions at 14 major banks are set to meet with the president and his top economic officials at the White House on Thursday, administration aides confirmed yesterday. They are bracing for a warning that the president will join the chorus of condemnation if they resist efforts to protect their credit card customers from unfair practices.</br></br>The high-profile meeting comes as members of Congress launch new efforts to crack down on credit card companies for such practices as arbitrarily raising interest rates on existing balances, charging late fees when enough time was not given between the billing and due dates, and charging interest on debt that was paid on time.</br></br>Lawmakers in the House plan to begin work tomorrow on a bill that would codify new Federal Reserve regulations aimed at curbing those practices. A separate bill in the Senate, sponsored by Sen. Christopher J. Dodd (D-Conn.), would go even further, prohibiting companies from applying a variety of charges. The measure includes capping over-limit fees at one per billing period, allowing no interest charges on fees and no fees to make a payment. The legislation also would prevent companies from raising interest rates at any time for any reason and limit aggressive marketing by card issuers aimed at borrowers under 21.</br></br>Industry sources said the president will tell the executives on Thursday that he wants to go further than the House bill without specifically endorsing all of the provisions of Dodd's bill. Administration officials confirmed that the president will push for stronger rules in some areas than those proposed in the legislation but is "broadly supportive" of the bills working their way through Congress.