This article has been updated.
By Eric Maddy
www.The-SCORE.info
RIO RANCHO — President Barack Obama traveled to New Mexico today to urge Congress to pass a “consumer bill of rights” that would place tighter restrictions on the credit card industry.
Speaking to a capacity crowd of more than 2,000 in the Rio Rancho High School gym, Obama said, “You should not have to worry that when you are signing up for a credit card that you are signing away all your rights. You shouldn’t need a magnifying glass or a law degree to read the fine print that sometimes doesn’t look like it’s been written in English — or Spanish.”
“But these practices have only grown worse in this recession. Enough is enough. It is time for strong, reliable protection for our consumers,” Obama said. “It’s time for reform that’s built on transparency and accountability and responsibility.”
“I’m calling on Congress to pass a credit card reform bill that protects American consumers and send it to my desk so I can sign it into law by Memorial Day,” he said.
Making his first stop in the state since taking office, Obama took the stage about 30 minutes late but ended his appearance almost on time. As a result, he took only five questions from the audience after 15 minutes of opening remarks.
Gov. Bill Richardson headed a delegation of state officials in attendance who were recognized by Obama, a list that also included Lt. Gov. Diane Denish, Secretary of State Mary Herrera, state Treasurer James Lewis and state Auditor Hector Balderas.
Richardson, like other New Mexico elected officials, was not on stage with Obama. He did not speak before Obama appeared. He was seated in the front row to the side of the stage, and did shake hands with the president after the event ended.
In addition to his opening introduction, during which he called Richardson “a great friend, one of the finest governors in the country,” Obama acknowledged Richardson twice during his speech. Once, speaking about the recession, he said New Mexico “has not been hit has hard as the rest of the county, largely in part to good government by your governor.”
Obama also praised a number of other officials who were in attendance.
Legislation won’t solve all problems
Instead of being introduced by a dignitary, the president was introduced by Albuquerque resident Chris Lardner, who wrote to the president last week after the interest rate on her credit card more than tripled because a college tuition payment put her over her credit limit.
The president acknowledged that legislation won’t solve all the problems surrounding credit card debt.
“One of the causes of this economic crisis was that too many people were living beyond their means, buying things they couldn’t pay for and maxing out on credit card they couldn’t pay back,” he said. “We’ve contributed to our own problems. We’ve got to change how we act.”
Obama said credit card regulation is something he has long supported.
“This is not an issue I just discovered recently,” he said. “For years I’ve been a proponent of strengthening consumer protections when it comes to credit cards. As a senator I fought predatory lending and credit card abuse. I called for what I called a credit card bill of rights.”
“Last month I met with the leaders of the major credit card companies to discuss these reforms that I believe will better protect 80 percent of American households that use credit cards,” he said. “We didn’t agree on anything… everything… a little slip of the tongue.”
That drew laughter from the crowd.
Only one of five audience questions related to credit card reform. It was about whether partisan gridlock could be broken to enact the proposed legislation. While noting the House version of the bill, which has already passed, drew more than 100 Republican votes, Obama also drew laughter and got in a political jab.
“Some Republicans were just philosophically opposed to the recovery package,” he said. “But they weren’t as worried when the previous administration was doubling our national debt.”
The president cited statistics that credit card companies collect more than $15 billion a year and that one in five card holders have made interest payments at a rate of more than 20 percent or more.
The Senate proposal
The specifics of a reform bill are still being worked out. Sen. Christopher Dodd, D-Conn., is sponsoring a slightly different bill than that approved by the House. The Senate could vote on Dodd’s bill this week.
Among the rules included in Dodd’s bill:
• Companies would not be allowed to increase interest rates on existing balances unless a card holder was 60 days behind. A company would also be required to return the rate to the previous level if payments were on time for six months.
• Consumers would have to be told of rate increases at least 45 days in advance.
• Companies would not be allowed to charge late fees if they were late in processing a payment.
• Statements would have to be mailed 21 days before payment was due.
• Restrictions would be tightened to make it more difficult to issue new cards to anyone under age 21.
• New accounts could not be increased within the first year.
• Promotional rates could not be increased for six months.
• Gift cards would have to be valid for a minimum of five years.
Dodd, who chairs the Senate banking committee, recently told the New York Times, “We like credit cards — they are valuable vehicles for many people. It’s when these vehicles are being abused by the card issuers at the expense of the consumers that we must step in and change the rules.”
Dodd’s bill does not freeze or cap interest rates, as some have advocated.
Obama has released a set of principles he says reform should include, and says he supports House and Senate legislative efforts.