UPDATE: Obama is set to meet with credit card company representatives on Thursday:
In a bid to aid consumers hit hard by the recession, lawmakers are pushing legislation this week that would ban a long list of credit-card practices that essentially amount to higher costs for consumers. Meanwhile, the Obama administration has scheduled a meeting with executives from credit-card issuers at the White House on Thursday, adding to pressure on the industry. President Barack Obama plans to attend.
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EARLIER:
Among the lamest trends of the recession has been the habit of bailed-out banks to arbitrarily raise interest rates on credit card holders. On Monday senator Bob Menendez repeated a request that administration officials put a stop to this indignity. In a letter to Treasury secretary Timothy Geithner, the New Jersey Democrat reissued a request he put to the previous administration: Make those banks knock it off.
"[M]y office has recently been inundated by calls and letters from New Jersey residents who have seen their interest rates shoot up even though they continue to make their payments on time every month," Menendez wrote. "They are very angry about this and have every right to be. This is not risk-based pricing; rather, it is merely a way for issuers to recover losses they are incurring at the expense of consumers."
The Huffington Post asked readers to share their credit card stories and was similarly inundated with letters from people across the country who said their interest rates were shooting up despite consistently timely payments. Many had received letters from banks pleading that rate hikes were happening because of the economy.
Menendez urged Geithner "to attach consumer protections as a condition for firms that accept taxpayer assistance."
It could be that Geithner will heed Menendez's words. On Thursday, Geithner will meet with President Obama, White House economic advisor Larry Summers, and executives from banks with large credit card divisions. Summers said on NBC's Meet the Press Sunday that the administration backs credit reform introduced by Democratic legislators. The president is very concerned "with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into," Summers said.
On Monday, White House spokesman Robert Gibbs specifically mentioned the Credit Cardholder's Bill of Rights, which would ban arbitrary interest rate hikes, among other things. Gibbs said it was unfair for people to have their rates skyrocket thanks to shifting contracts written in tiny-sized legalese "your eye doctor [would] use on your eye test."
Asked about Thursday's meeting, Gibbs responded:
"There are meaningful uses for credit, obviously, in this economy," Gibbs said. "What we want to do is ensure that people have access to the credit if they need it, but that we can also do this in a way, as I just mentioned, that is transparent and fair and honest."
Read a PDF of Menendez's letter here.