Obama Continues Credit Card Smackdown Against Credit Credit Card Companies

Credit card companies met with President Obama on Thursday to discuss the smackdown against interest rate hikes and excessive fees on consumer credit cards.

Consumer groups and congressional Democrats are rewriting the rules of lending practices by credit card companies, banks, and other lenders. The house bill led by Rep. Carolyn Maloney, is similar to one passed last year.

"This bill cracks down on some of the most outrageous abuses," Maloney said. "My bill levels the playing field so consumers have more control over their credit."

Bank of America Global Credit Services President Ric Struthers, along with 14 other financial services executives and representatives from the American Bankers Association (ABA), met with President Obama, Treasury Secretary Timothy Geithner, National Economic Council Director Larry Summers and other officials at the White House to discuss important issues regarding credit cards.

The group discussed the importance of credit cards to consumers, small businesses and the U.S. economy. They also covered trends in credit card use and lending. They also talked about the economic factors affecting the credit card business and consumers, including rising unemployment and the recession.

"It was a productive meeting, said Struthers. "I'm glad we had the opportunity to talk with the president and his administration. We look forward to ongoing dialogues with the administration on this important topic."

According to Struthers, during the meeting the president stressed that he wants a set of rules for credit cards that are sustainable, clear and include strong consumer protections. And he asked the industry leaders to be mindful of impact its actions are having on businesses.

One of four executives chosen to make formal comments, Struthers' message to the president focused on the effects of the economy on the credit card industry:

- We understand fully the severe impact these conditions are having on the health and stability of the U.S. economy, businesses and our customers. What at first was assumed to be a short, relatively shallow slowdown, has become much longer and deeper than anyone anticipated.

- The current economy is also affecting all credit card issuers. Credit card issuers lost money in the fourth quarter of 2008 and first quarter of 2009 driven by increased pressure on consumers from rising unemployment, declining consumer confidence and slowing discretionary spending.

- Our goal is to find the right balance in meeting the credit needs of our customers, providing a reasonable return for our shareholders and continuing to do all we can for consumers who are in financial distress.

- To support economic growth and the health of the American consumer, financial services companies recognize the importance of continuing to lend. And in this difficult environment, we are making every good loan we can. For example, Bank of America extended $8 billion of unsecured consumer credit during fourth quarter of 2008 and another $6 billion in the first quarter of 2009.

Following the meeting, the ABA issued a statement: "The president did raise concerns about certain issues surrounding credit cards. The card executives listened carefully to those concerns and agreed to work with the administration to address them."

See the question and answer session with Bank of America's Ric Struthers regarding the impact of the economic environment and increased regulations against credit card companies.