President Obama tells bank execs he wants credit card consumer protections enacted in 'short order.'

[flpoljunkie]

MSNBC just showed the feed from President Obama's meeting with the heads of a dozen or so credit card companies--several of who received TARP funds.

Obama wants a new equilibrium where credit is flowing and bankers receive responsible profits and in which consumers are protected.

He made five points, which I have tried to summarize:

1. Consumer protections are needed, Banks must put an end to unfair rate increases, abusive fees and penalties.

2. Credit card companies must use plain language. There must be clarity and transparency.

3. Consumers must be able to easily comparison shop for credit cards. This would, of course, require the clarity and transparency he spoke about in his second point.

4. There must be accountability, effective regulation and oversight of credit card companies.

5. President Obama would like these things done 'in short order.'

[DJ13]

1. 6. Caps on interest rates

<crickets>

[flpoljunkie]

2. Read Bernie Sanders. Stop Loan-Sharking: Cap Credit Card Interest Rates

Stop loan-sharking: Cap credit card interest rates

By Sen. Bernie Sanders (I-Vt.)
Posted: 03/19/09

The Masters of the Universe on Wall Street — through their greed, recklessness and illegal behavior — have plunged this country into a deep recession causing millions of Americans to lose their jobs, their homes, their savings and their hope for the future. In order to fully understand the cause of this fiasco, I have introduced legislation calling for a thorough investigation of the financial meltdown and the prosecution of those CEOs who broke the law. The culture of greed, fraud and excessive speculation must come to an end.

In the midst of this financial disaster, one of the great frustrations that I hear from my constituents is that while taxpayers are spending hundreds of billions bailing out major financial institutions, and while these big banks are getting near-zero interest rate loans from the Fed, these very same financial institutions are now charging Americans 20 percent or 30 percent interest rates on their credit cards.

One-third of all credit card holders in this country are now paying interest rates above 20 percent and as high as 41 percent — more than double what they paid in interest in 1990. Recently, some major institutions such as Bank of America have informed responsible cardholders that their interest rates would be doubled to as high as 28 percent, without explaining why the increase was taking place.

Let’s be clear: At a time when many Americans in the collapsing middle class use credit cards for groceries, gas and college expenses, what Wall Street and credit card companies are doing is not much different from what gangsters and loan sharks do when they make predatory loans. While the bankers wear three-piece suits and don’t break the kneecaps of those who can’t pay back, they are still destroying people’s lives.

We need a national usury law because state laws no longer work. States used to protect consumers from predatory lenders, but strong state usury laws were obliterated by a 1978 U.S. Supreme Court decision. Justices allowed national banks to charge whatever interest rate they wanted if they moved to a state without an interest rate cap like South Dakota or Delaware.

That is why I have introduced legislation to require any lender in this country to cap all interest rates on consumer loans at 15 percent, including credit cards. Why did I select 15 percent as the appropriate rate to deal with the usury that is going on in this country? The reason is that 15 percent is the maximum that Congress imposed on credit union loans almost 30 years ago when it amended the Federal Credit Union Act. And that approach has worked!

Under current law, credit unions are allowed to charge higher interest rates only if their regulator, the National Credit Union Administration (NCUA), determines that it is necessary to maintain the safety and soundness of these institutions. Right now, while most credit unions charge lower rates, the NCUA allows credit unions to charge an interest rate as high as 18 percent.

Unlike their counterparts at the big banks, credit unions are not lining up for hundreds of billions in bailouts. In fact, they’re doing quite well. As Chris Collver, legislative and regulatory analyst for the California Credit Union League recently stated, “It hasn’t been an issue. Credit unions are still able to thrive.” In my view, if these rules have worked well for credit unions for decades they can work for all financial institutions.

In 1991, then-Sen. Al D’Amato (N.Y.) offered an amendment to cap credit card interest rates at 14 percent. The amendment passed the Senate by a vote of 74-19, but never became law. Now is the time to return to that debate.

Incredible as it may seem, over the last decade the financial sector has invested more than $5 billion in political influence purchasing in Washington. This includes funding some 3,000 lobbyists and contributing huge amounts to campaigns.

The American people are thoroughly disgusted with the behavior of Wall Street and they want their elected officials to respond to the greed of major financial institutions. A cap on interest rates would be a good start. Do we have the courage?

http://hill6.thehill.com/op-eds/stop-loan-sharking-cap-credit-card-interest-rates-2009-03-19.html

[flpoljunkie]

3. Bernie Sanders: "Do we have the courage?'

He means Congress, of course.

[andym]

7. Capping the maximum rate at something reasonable over the prime rate is a good idea nt/

[Lugnut]

8. +10

It's leglized loan-sharking.

[roguevalley]

11. yeah. nothing listed matters if they can still apply usurious rates, the

evil fuckers.

[flpoljunkie]

4. Politico has video link of President Obama's remarks after meeting with credit card company execs

http://www.politico.com/singletitlevideo.html?bcpid=1155201977&bctid=20849430001

[AtomicKitten]

5. I wonder if he can walk back what they've done over the past few months.

[ellacott]

9. That's what I'm hoping he could do

[roguevalley]

12. I doubt he will. Someone spouted 2010 on the tv a minute ago. They

won't go quietly and their carrion dogs in congress won't let them.

[andym]

6. Excellent.

Let's hope this gets implemented ASAP. I wonder how many accounts have had interest rates raised and credit lines lowered in the last 12 months, with special emphasis on the last 4 months. Even more interesting would be the number of accounts that had this happen that are on-time with greater than minimal payments being made.

[flpoljunkie]

10. Robert Gibbs recaps the credit card meeting in today's press avail...

Gibbs recaps the credit card meeting. More on POTUS's meeting with credit card execs:

Gibbs says "the industry laid out its case," that execs believe what the FED is doing is enough. POTUS disagreed with them, Gibbs said, and told them the government had to go beyond that to protect consumers.

POTUS also told execs about the letters he gets from people hurting in this economy, noting that they often mention their struggles with credit card companies.

Gibbs notes that Obama may be the first president in some time to come to office having recently carried credit card debt. (3:00 p.m.)

http://www.politico.com/politico44/