Today, President Barack Obama is meeting with executives from the credit card industry, in order to advocate “more legal protection for the millions of Americans who use credit cards.” As CBS reported, “the credit card issuers include the same big banks – Bank of America, Citicorp and JPMorgan Chase – that have gotten billions in bailout money meant to stimulate consumer lending.” Other participants reportedly include representatives from Capital One, Visa, and Mastercard.

This comes one day after the House Financial Services Committee approved legislation aimed at curbing abusive practices employed by credit card issuers:

The House measure would restrict card companies’ ability to raise rates on existing customers and ban certain controversial practices, such as applying payments to the portion of a borrower’s balance with the lowest interest rate. It would also bar issuers from charging interest on parts of the balance that were already paid on time, a practice known as double-cycle billing.

The committee vote was 48-19, with 9 Republicans joining all voting Democrats in supporting the measure. 19 Republicans voted against it. The bill (HR 627) will now move to the House floor, where it is expected to pass.

However, according to the New York Times, the proposal is “in jeopardy because of lobbying by banks and their trade groups, particularly in the Senate.” “Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting” the measure, the Times noted.

As Chris at Americablog wrote, “there’s no question more consumers could have been smarter about how they deal with easy credit, but the same could also be said about Wall Street, yet they received a fat bailout.” And as TARP watchdog Elizabeth Warren pointed out, bailed out banks hiking rates and fees amounts to “asking taxpayers to pay twice.”

Indeed, there’s plenty of blame to go around when it comes to the amount of debt Americans are carrying, but that doesn’t mean that curbing abuse is any less important. In fact, the Federal Reserve was planning to implement many of these reforms anyway, and one of the reasons that industry is so concerned by the House’s bill is that “it believes a law would be harder to overturn than a [Federal Reserve] regulation.” So if given the chance, will the Senate vote to protect consumers, or will it bend to the will of bailed out banks?

Today, Federal regulators moved ahead with a good plan designed to stop credit card companies from taking advantage of their clients. The Federal Reserve, in conjunction with Office of Thrift Supervision and National Credit Union Administration, have released a specific, seven-point proposal to tackle “unfair” and “deceptive” practices by businesses that issue credit cards.

According to the Center for American Progress, the new rules would prohibit companies from:

– Raising interest rates on debt that has already been charged

– Assessing late fees when consumers are not given a billing statement within a reasonable amount of time to make a payment

– Applying a payment to the balance with the lowest rate if different interest rates apply to different balances on the same card

– Charging fees to open an account and receive credit

This move by the federal agencies comes with little time to spare. Now that borrowing in the mortgage market has stagnated due to the subprime crisis, credit card debt has skyrocketed for Americans. Between April 2006 and December 2007, the rate of national credit card debt increased four times faster than during the previous business cycle.

Similar to mortgages, credit cards can carry subprime-like lending conditions, such as poorly-disclosed, hidden, or higher fees, heavy interest rate burdens, and complex terms. Also similar to mortgages, credit card debt is packaged and sold off to investors as securities — and the $915 billion held in these securities can come tumbling down just as easily as the $900 billion that were held in residential mortgages.

The administration missed the regulatory boat once. One in 194 American households received a foreclosure filing during the first three months of this year, up 23% from the last final three months of 2007. After two decades of deregulation, the subprime crisis has sparked a need to reassess the Federal government’s role in protecting Americans against the predatory and abusive lending practices exercised mortgage lenders that caused the crisis in the first place.

Today’s proposal shows that the federal regulators are doing the right thing. They have undertaken “one of the most aggressive efforts in decades to crack down on the credit card industry.” Hopefully live up to this unique opportunity to learn from their mistakes.