Obama to Take On Credit Card Companies

Senior executives of the nation's leading credit card companies are scheduled to meet with White House economic advisor Larry Summers and other administration officials at the White House on Thursday. It may not be a pleasant meeting.

The Obama Administration is determined to crack down on deceptive and abusive credit card practices that encouraged people to rack up debt, then hit them with high interest rates, Summers said during an appearance on NBC's "Meet the Press" on Sunday.

"We need to do things to stop the marketing of credit in ways that addict people to it," said Summers, director of the White House National Economic Council. He said the issue is top priority of President Obama.

"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.

Need to encourage saving

Summers said it was important for Americans to start saving more if the economy is going to recover. "That's why we need to do things to stop the marketing of credit in ways that addicts people to it," he said. "So that our households are again saving, and families are again preparing to send kids to college, for their retirement, and so forth."

It's unclear how the administration's efforts will relate to other restrictions on credit card practices now in the works. The Federal Reserve announced new rules for credit card companies in December, but those are not due to take effect until 2010. Legislation that would implement even more stringent restrictions on a faster timetable are now being considered by the House and Senate.

The new rules are generally designed to limit lenders' ability to arbitrarily raise interest rates or change other rules on existing cards, as well as limiting some marketing practices, such as offering credit cards to persons under age 21.

Industry calls for go-slow approach

Banking industry officials are saying that Congress and the administration should give the Federal Reserve rules time to take effect before taking further action.

"The industry understands the concerns about credit cards, but the administration should fully recognize the impact of the Federal Reserve Board regulation, which is one of the strongest consumer- protection regulations ever adopted," said Edward Yingling, president of the American Bankers Association. "As we go forward we need to be careful about piling on rules that very much may have the impact of restraining the availability of credit."