Obama Signs Credit Card Bill

Rep. Carolyn Maloney, D-N.Y. and Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., hold up pens President Barack Obama used to sign the Credit Card Accountability, Responsibility and Disclosure Act, Friday, May 22, 2009, in the Rose Garden of the White House in Washington. From left are, Sen. Carl Levin, D-Mich., Maloney, Sen. Charles Schumer, D-N.Y., Sen. Robert Menendez, D-N.J., Senate Majority Leader Harry Reid of Nev., Dodd, Sen. Richard Shelby, R-Ala., ranking Republican of the Senate Banking Committee and Rep. Walter Jones, R-N.C. (AP Photo/Charles Dharapak) AP

President Barack Obama warned overeager shoppers and greedy credit card companies alike on Friday to act responsibly as he signed into law a bill designed to protect debt-ridden consumers from surprise charges.

The White House staged a signing ceremony in the Rose Garden, an indication of the legislation's importance to Obama. Though opposed by many financial companies, the bill cleared Congress with broad support.

Obama made clear that he didn't champion the changes with the intention of helping those who buy more than they can afford through "reckless spending or wishful thinking."

"Some get in over their heads by not using their heads," the president said. "I want to be clear: We do not excuse or condone folks who've acted irresponsibly."

And yet, he said, for many of the millions of Americans who use credit cards and carry a balance, trying to get out of debt has been made difficult and bewildering by their credit card companies.

The new law protects consumers from surprise charges, such as over-the-limit fees and costs for paying a bill by phone. It overhauls credit card regulations that the president blames in part for the economic downturn.

"With this bill we're putting in place some common sense reforms," Obama said. "Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly, too."

Obama did not, however, celebrate a gun amendment included in the legislation. The measure by Sen. Tom Coburn, R-Okla., allows people to bring loaded guns into national parks and wildlife refuges.

The addition of the amendment to the bill and Obama's acceptance of it was viewed as a bitter disappointment for gun-control advocates.

They watched gun-rights supporters gain a victory from a Democratic-controlled Congress and a Democratic president that they couldn't achieve under a Republican Congress and president. Many blamed the National Rifle Association, which pushed hard for the gun law.

The new credit card rules, which would go into effect in nine months, would prohibit companies from giving cards to people under 21 unless they can prove they have the means to pay the debt or a parent or guardian co-signs for the card.

Under the bill, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender would be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.

Consumers also would have to receive 45 days' notice and an explanation before their interest rates increased.

Last year, the Nilson Report estimated that more than 700 million credit cards were in circulation in the United States. That's more than two cards for every man, woman and child.

Many cardholders are carrying hefty balances. According to the Federal Reserve, the nation is some $2.5 trillion in debt, a figure that does not include home mortgages.

Credit, the president said, has become "less of a lifeline and more of an anchor."

Obama lobbied hard for congressional approval of the legislation, meeting with credit card company executives and discussing the act in a town hall meeting earlier this month.

Some conservatives, however, have expressed reservations about the unintended consequences of the new law. Rep. Scott Garrett (R-N.J.), a member of the House Financial Services Committee, told CBS News last month that it could result in a contraction of credit available, at a time when it is needed the most.
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