WASHINGTON - U.S. President Barack Obama signed into law on Friday sweeping reforms that restrict credit card interest rates and fees, marking a victory for Democrats trying to help recession-weary consumers.
But the law is expected to hurt profits of major card issuers such as Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and Capital One Financial Corp. Banks say the changes may cut the flow of credit to consumers because it will make it more difficult for issuers to set rates based on the risk their customers pose.
With this bill we are putting in place some common sense reforms designed to protect consumers, Obama said at a signing ceremony at the White House.
We're not going to be giving people a free pass and we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives, he said.
Enactment marks the crest of a backlash against the card industry after years of rate and fee hikes and aggressive marketing programs that have angered consumers, analysts said.
It also represents the first major financial regulation reform completed by Obama as he tackles a rewrite of the rules of banking and the markets to better protect consumers and investors, and prevent another credit crisis.