President Barack Obama will weigh in on Thursday on the lending practices of U.S. credit card companies, an issue that has triggered an outcry from consumers hit with high fees and interest rates.
Obama has joined a push by lawmakers to rein in credit card practices that his aides have labeled as abusive and plans to air some of his concerns at a White House meeting with 13 executives from top banks and companies that issue the cards.
Senior White House aide Valerie Jarrett said Obama, who is trying to rescue the U.S. economy from recession and fight the financial crisis on a variety of fronts, hopes to see new rules of the road for the credit card industry.
He looks forward to having an open and productive conversation ... with the representatives of the credit card industry about the impact of the current crisis on consumers, she said.
Executives from Bank of America Corp, American Express Co, Citigroup Inc, Wells Fargo & Co, JPMorgan Chase & Co, Capital One Financial Corp, Visa Inc and MasterCard Inc will be among those due to visit the White House.
The meeting, scheduled for 1 p.m. EDT, comes a day after a House of Representatives bill to curb credit card fees and limit penalties cleared a key panel.
The legislation -- dubbed the Credit Cardholders' Bill of Rights -- would codify into law restrictions on deceptive practices issued by the Federal Reserve in December.
The legislation would stop credit card issuers from imposing arbitrary interest rate increases and penalties, while halting certain billing practices. A separate version of the bill is under review in the Senate.
The differences will need to be reconciled for the bill to become law and White House aides are working with members of both chambers to try to arrive at a consensus.
TIGHTENING THE RULES
Lawmakers have expressed outrage that many of the card-issuing banks are the same ones that have received government bailout money, paid for by the U.S. taxpayers who use the cards and are being saddled with the high fees.
Obama economic adviser Lawrence Summers last weekend accused the companies of having encouraged Americans to become addicted to credit after luring them with aggressive marketing campaigns and deceptive interest-rate terms.
The effort to tighten the rules on those firms is part of a broader regulatory reform agenda Obama is pursuing after taking office in January amid the worst economic crisis in decades.
Obama campaigned on the credit card issue last year.
Banks say the tighter rules for card issuers would hurt fee income at a time when they are trying to climb out of a financial hole created by the collapse of the housing boom.
The American Bankers Association trade group, which represents the biggest credit card issuers, said it is concerned the House bill could reduce the availability of consumer credit and make it more expensive.
As U.S. job losses mount, credit card defaults are running at record highs. Lenders are seeking to protect themselves by tightening credit limits and closing accounts -- actions that are angering lawmakers and consumers.
A White House official said the meeting with the credit card executives was arranged after some industry representatives approached Obama's aides to request a discussion.
As part of our ongoing outreach to the business community, we decided to expand the group to make the meeting as productive as possible, the White House official said.
While Obama wants to see stricter rules, he recognizes that credit cards are a critical source of liquidity and can be a last line of credit during hard economic times, the official said.
(Editing by John O'Callaghan)