Obama Urges Credit-Card Reform

MAY 10, 2009, 2:00 P.M. ET

By HENRY PULIZZI

WASHINGTON -- President Barack Obama on Saturday pressed lawmakers to send him credit-card reform legislation by Memorial Day, May 25, saying consumers need stricter protections against unfair interest-rate hikes and penalties.

"There is no time for delay," Mr. Obama said in his weekly address. "We need a durable and successful flow of credit in our economy, but we can't tolerate profits that depend upon misleading working families. Those days are over."

On April 30, the House of Representatives passed White House-backed legislation that would limit the ability of card issuers to retroactively increase the interest rate on a consumer's balance. It would also require firms to provide consumers 45 days notice before interest rate changes take effect, and prohibits double-cycle billing and fees that have led to outcries from consumer groups. The Senate is expected to act on its version of the legislation next week.

Mr. Obama will push the cause for reform again at a town hall event in Albuquerque next week. He will be in New Mexico on Thursday, the end of a two-day trip that also includes a commencement address at Arizona State University.

The banking sector has lobbied against the reform legislation, arguing that new rules could cut off the flow of credit to consumers and send rates higher.

But Mr. Obama said Saturday that it is past time for a fair and transparent set of principles to guide the industry. That includes heightened monitoring, enforcement, and penalties for credit-card companies that break the rules.

"Americans know that they have a responsibility to live within their means and pay what they owe. But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties, and hidden fees that have become all too common in our credit card industry," Mr. Obama said.

"You shouldn't have to fear that any new credit card is going to come with strings attached, nor should you need a magnifying glass and a reference book to read a credit card application."

White House spokesman Robert Gibbs said Mr. Obama would use the Albuquerque town hall event to discuss "the legislation that's moving through Congress and the strong desire to get something done on an issue of tremendous importance to middle-class families."

In the weekly address, Mr. Obama repeated his view that the U.S. economy is beginning to find firmer ground, pointing to good news on consumer spending and home sales.

But with the unemployment rate at a 25-year high, he acknowledged that the economy isn't out of the woods yet.

"We are still in the midst of a deep recession that was years in the making, and it will take time to fully turn this economy around," Mr. Obama said.

Write to Henry Pulizzi at henry.pulizzi@dowjones.com

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