Barack ObamaALBUQUERQUE — President Barack Obama will be in New Mexico Thursday morning to host a town hall on credit card debt at Rio Rancho High School.

During his campaign for president, Obama promised to crack down on credit card companies, which he said were taking unfair advantage of consumers. One bill that would do just that has passed the U.S. House of Representatives and another more restrictive version is likely to come to a vote in the U.S. Senate within the next week.

Obama has been urging passage of the Senate bill, known as the Credit Card Accountability and Disclosure Act (or CARD Act), sponsored by U.S. Sen. Chris Dodd of Connecticut.

Consumer groups have become increasingly vocal about abuses they claim the industry perpetuates against customers, whom they say have been largely powerless to fight back against huge credit card companies.

“The industry has become lawless. Owning a credit card company has become a license to steal,” says Ed Mierzwinski, a consumer advocate in the Washington, D.C.-based federal lobbying office of the National Association of State Public Interest Research Groups (U.S. PIRG).

As Consumerist.org reported today, the American Bankers Association opposes the CARD Act, saying it would make it harder for companies to extend credit and therefore harder for consumers to access it. As the organization wrote in a letter to two senators:

ABA recognizes that the Senate bill contains a number of important consumer protections embodied in recent regulatory action, and acknowledges that change is forthcoming in the way the credit card industry and its customers interact. However, we strongly believe that any legislation in this area needs to achieve the correct balance of consumer protections and market flexibility so as to not jeopardize access to credit.

This recent move to crack down on credit card companies marks a sudden change in federal policy.

“I’ve been in Washington for 20 years, and for the first 19 we couldn’t get a credit card bill to a vote in a committee — that’s how powerful the industry was,” Mierzwinski explains.

Things got worse for consumers in 2005, when Congress passed a law making it harder for consumers — saddled with debt — to file for bankruptcy.

“Congress thought the industry would clean up their act, but no, since 2005, they’ve tightened the thumb screws,” Mierzwinski adds. “[T]hey started saying, ‘If you’re late by as little as one hour, we are not only going to charge you a late fee, we’re going to raise your rate, and because federal regulators are asleep, we’re going to raise it to 35 percent.’”

The CARD Act would require credit card companies to give 45 days notice of any interest rate increase and to make full disclosures of payment due dates, late payment penalties and changes in the card terms.

Another industry practice targeted by the CARD Act is known as “universal default.” The practice allows card companies to raise a cardholder’s rate simply because he or she paid another bill late.

“The straw that broke the camel’s back was when they started to raise your rate when you paid everybody on time,” Mierzwinski says.

The CARD Act would also prohibit credit card companies from raising rates without reason or notice.

Another element of the bill is aimed at helping young people stay out of trouble with credit cards. Companies would be forbidden to issue cards to people under 21 unless they prove they have the means to pay, or complete a financial literacy course.

(For more complete details on the CARD Act, see a very clear explanation here, on the Senate Banking Committee’s Web site.)

Not included in this legislation are measures that would affect other kinds of lending, including so-called payday loans, car title loans and tax refund anticipation loans. But consumer advocates in New Mexico say they hope Obama will address what they call “predatory lending” practices that affect many in the state.

“I think this CARD Act will probably pass in the next day or two, but I would say the next step should be to target these kinds of small loans,” says Bill Jordan, policy director of New Mexico Voices for Children.

Jordan pointed to a recently released study showing that a surprisingly high number of low-income New Mexicans get their tax rebates through high-interest refund anticipation loans.

“This is a major problem for low-income families in new Mexico, so we hope he draws attention to these practices,” Jordan says.

“We’re looking at millions of dollars in money that is intended for low-income families in both the Earned Income Tax Credit and the Working Families Tax Credit. Lenders are skimming millions of dollars off the top by taking a percentage for what is essentially a guaranteed loan. But there’s no risk. … There’s not full disclosure that it’s even a loan,” Jordan says.