organizing for America

White House Advisor Austan Goolsbee on Credit Card Reform
By Christopher Hass - May 18th, 2009 at 6:34 pm EDT
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The Senate is set to vote on its version of the Credit Card Holder's Bill of Rights tomorrow, an important set of consumer protections and reforms that President Obama has pressed for. Last week, the consumer affairs blog The Consumerist sat down with White House Senior Economic Advisor Austan Goolsbee to disucss the Administration's stance on the issue.

From the transcript of the video, here is Austan Goolsbee on the need for credit card reform:

As the President said, there's nothing wrong with a credit card industry where people can get access to credit, and people ought to pay their bills, but what we've gotten into is this situation where you've got some players engaging in clearly deceptive practices and predatory practices where consumers don't have full information about what they're getting themselves into, and where the industry's made more than $15 billion in penalty fee income last year. So what they've done is just turned what use to be fees for penalties into really a profit center. And we've got to get away from a model like that.

On the importance of transparency:

The President totally agrees with the importance of disclosure, and disclosure and transparency. Which are related but not the same thing. I mean, I have a PhD in economics, I can't understand a lot what's in the contracts under your credit card, and my eyesight is not sufficient to even be able to read it a lot of the times.

And on ending unfair practices:

But in addition, there are certain practices, that, even with disclosure, they're relatively hard to explain, and the credit card companies have engaged in gaming the system so that they just need to be prohibited. So, setting your payment date to be on a Sunday, so that you literally can't pay on the payment date, it either has to come in early or else it's late and you get a penalty fee. Or setting the payment time to be noon, so even if it comes in but it came in in the afternoon oohp! You had a late fee, you add another $15. So there are a series of practices, be it the form of penalty fees, raising interest on loans you already took out, a variety of other things that the President thinks we need to do more than just disclosure and transparency.