About The Browntable
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2010
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President Barack Obama met with executives at about a dozen major credit card companies today at the White House. The meeting, with heads of VISA, Mastercard, Capital One, American Express, JP Morgan Chase and others, was intended to push the issue of consumer credit card debt into the same larger conversation as bank collapses, mortgage defaults, individual bankruptcy and the TARP-fest now taking place on Wall Street.
After the meeting, Obama told reporters his administration is asking the lending companies the touchy questions:
[H]ow do we create a framework where this kind of crisis doesn't happen again, and how do we create a sustainable model for economic growth and debt that is not based on bubbles and overleveraging on the part of businesses and consumers is the issue of credit cards and how they're used and how we can create a more stable, more effective, more consumer-friendly system.
Obama also said that while he believes credit cards are “an important convenience”, they are a danger as well when abused. This assessment is backed up by the facts: Credit card debt has increased by 25 percent in the past decade, delinquency rates have increased by more than a third since the end of 2006, and most families are carrying a median credit card debt of $3,000. That’s not good in flush economic times, but in a recession, and with mounting unemployment, high interest rates and falling income could see these obligations balloon out of control.
Despite the troubling numbers, Obama seemed keen to telegraph that when we think of abuse we should not focus solely on those reckless spenders who rack up tens of thousands in credit card debt. Rather, the president described how companies owned by the executives in attendance at times take advantage of consumer financial illiteracy, with a detrimental effect on working families. He also decried specific pitfalls of a credit culture:
people finding themselves starting off with a low rate and the next thing they know their interest rates have doubled; fees that they didn't know about that are suddenly tacked on to their bills; a whole lack of clarity and transparency in terms of the terms and conditions of their credit cards.
He pledged to push for congressional reform on the issue this year, offering comparison shopping, transparent contract terms and requiring every credit card company that has fancy terms and rates to also ofer "a plain vanilla, easy to understand, simplest terms possible credit card as a default credit card that the average user can feel comfortable with."
As Kai points out, we must all “consume less needless crap”—and stop charging for it, too. But it’s good to see the president stick up for average consumers in the face of an industry that has become very good at using sleight of hand to push unwitting customers into real financial trouble.
—DAYO OLOPADE
BONUS interactivity features:
Slate’s quiz: Are you an Overbuyer or an Underbuyer?
And: Indebted.com’s fun-at-work jet-skiing video game, designed to teach us all a little bit about financial literacy.
UPDATE: Larry Summers, chair of the president's council of Economic advisers, is rumored to have been nodding off during the President's presentation. Sure enough, he's dozing at the very top of the photo above.
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