Obama on the Record: Credit Cards

THE PRESIDENT: Well, I just had a constructive meeting with the heads of many of the leading credit card issuers here in the country. Obviously we’re at a time where issues of credit and how businesses and families are able to finance everything from a car loan to a student loan to just paying their bills every day is on a lot of people’s minds. And Secretary Geithner and our economic team has worked diligently to try to restore confidence in the credit markets, to assure that the non-bank financial sector is stronger, to ensure that banks have the capital they need, and that that money is getting out the door to the ultimate end user — the American businessperson and individual.

We’re still seeing some problems, although we think that we’ve begun to make progress.

One of the areas, as we move forward and look at financial regulation, how do we create a framework where this kind of crisis doesn’t happen again, and how do we create a sustainable model for economic growth and debt that is not based on bubbles and overleveraging on the part of businesses and consumers is the issue of credit cards and how they’re used and how we can create a more stable, more effective, more consumer-friendly system.

We had a discussion with some of the top issuers here, and what I communicated to them is that I think credit cards are an important convenience for a lot of people. They are a source of unsecured debt for a lot of individuals and small businesses who are creating jobs; a lot of startups may use credit cards for that purpose. We think that’s important, and so we want to preserve the credit card market.

But we also want to do so in a way that eliminates some of the abuses and some of the problems that a lot of people are familiar with — people finding themselves starting off with a low rate and the next thing they know their interest rates have doubled; fees that they didn’t know about that are suddenly tacked on to their bills; a whole lack of clarity and transparency in terms of the terms and conditions of their credit cards.

And so there’s going to be action in Congress. Our administration is going to be pushing for reform in this area. We think it’s important that we get input from the credit card issuers as we shape this reform, but there — and I’m going to leave it up to my economic team to work with Congress to evaluate all the various proposals and to get some very definitive language in place.

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