Obama met with some representatives from the credit industry today in advance of his administration's effort to better regulate the industry. Which is the sort of thing that frequently frustrates Obama's left-leaning critics. But walking out, he gave some quick remarks that should comfort them, including this statement of regulatory principles:
First of all, I think that there has to be strong and reliable protections for consumers -- protections that ban unfair rate increases and forbid abusive fees and penalties. The days of any time, any reason rate hikes and late fee traps have to end.Number two, all the forms and statements that credit card companies send out have to be written in plain language and be in plain sight. No more fine print, no more confusing terms and conditions. We want clarity and transparency from here on out.Number three, we have to make sure that people can comparison shop when it comes to credit cards without being afraid that they're going to be taken advantage of. So we believe that it's important to require firms to make all their contract terms easily accessible online in a fashion that allows people to shop for the best deal for their needs.
It's not clear to me how you regulate fine print (just make the text larger and the pamphlet bulkier?) or confusing terms and conditions. If credit cards are complicated than credit card adverts will be complicated. And that's a feature, not a bug. So long as the card issuer knows more than the card holder, that gives them an advantage in the relationship. Which is why I liked the specific reform Obama mentioned, which isn't so much a regulation as an imposed mandate. "We think that one of the things that needs to be explored is the possibility that every credit card issuer has to issue a plain vanilla, easy to understand, simplest terms possible credit card as a default credit card that the average user can feel comfortable with," suggested Obama. Obama's full remarks are below the fold. Read down to the snap Q&A, where Obama is asked whether there's a tradeoff between industry revenues and consumer protection, and he actually replies in the affirmative. "We think that it's been out of balance," he says.
