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The Washington Post is reporting that the Obama Administration has summoned executives of the 14 largest credit card issuers to the White House next week for a meeting. Apparently, the executives plan to discuss efforts to increase transparency and help the economy. The Obama Administration is likely to discuss the advanced implementation of Fed rules designed to protect consumers.
A quick history lesson will help put this meeting in perspective. Back in December 2008, the Federal Reserve published new credit card regulations designed to protect consumers from what some view as predatory lending practices in the credit card industry. The regulations restricted a credit card company’s ability to raise interest rates, required card issuers to more fairly apply payments across all balances subject to varying interest rates, and other consumer-friendly rules. The new rules, however, don’t go into effect until July 1, 2010, which has consumer advocacy groups up in arms.
Congress has made noise about passing credit card legislation similar to the Fed’s regulations, but with an earlier effective date. Several credit card legislative bills have been introduced in both the House and Senate, but none is close to final. And that brings us back to next week’s meeting at the White House.
It’s likely that the Obama Administration will push the executives to implement many of the Fed’s rules now, rather than waiting until 2010. Earlier adoption of the new credit card rules could stave off further federal legislation, but it’s unclear whether the credit card companies are willing to play ball. Consider the meeting next week as Round 1 in what is sure to be an epic battle.