Obama moves to fulfil credit card fees pledge

Congress and the White House are moving to rewrite the rules of the credit card industry to tackle fees and practices that consumer groups claim are abusive.

Barack Obama, the US president, will on Thursday meet executives from 14 credit card issuers, including American Express, Bank of America, Capital One Financial, Citigroup, Discover Financial Services, and JPMorgan Chase, to discuss concerns over practices such as raising interest rates on existing balances.

On Wednesday, a congressional panel was expected to approve a bill that would curb high credit card fees and penalties imposed by many banks that have benefited from the federal government’s financial bail-out programme. The proposals are similar to sweeping rules adopted by US federal regulators in December. These rules take effect in July 2010, but the bill’s approval would accelerate their implementation, forcing the country’s banking industry to forgo billions of dollars of annual interest payments sooner.

The regulator’s rules impose strict new disclosure standards on credit card lenders and prohibit pricing practices that have been criticised for exposing borrowers to unforeseen costs.

The pro-consumer bill is an important test of the political will of Democrats who are pushing for US financial regulation reform.

During his presidential campaign, Mr Obama made an issue of excessive credit card fees but he has since been largely silent on the matter. As a candidate, he also favoured legislation to make it easier for troubled homeowners to use bankruptcy courts to ease the terms of their mortgages.