White House sounds the last trump for credit cards

The howitzer of Americans' anger is finally turning away from Wall Street to the credit-card industry.

New regulations encouraged by the Obama administration are forcing the card companies to be more transparent with consumers and give them more time to pay their bills before jacking up their interest rates. To compensate for the lost revenue, they are expected to start hitting up those with good credit histories for new annual fees and cut back on rewards schemes.

It often seems like this financial crisis is operating at two levels. At the higher level you have bailouts, government intervention and talk of "green shoots", at the lower, worsening unemployment, home foreclosures and credit card debt.

Whenever I turn on my car radio, I am bombarded with advertisements from credit counselling services, debt consolidators and the organisers of foreclosure auctions. It's a far better indicator of the true health of the US economy than any words coming from Wall Street or Washington.

The government's stress tests showed that America's 19 biggest banks will lose around $82 billion on credit-card defaults over the next two years. This is even after making around $20 billion a year in penalty fees, like charges for late payment. But their bigger problem is that retailers, who must pay fees per transaction, and consumers, who feel constantly ripped off, hate the card companies. The government is responding to their hostility.

One of President Obama's economic advisers, Austan Goolsbee, compared the credit-card industry's current practices with "a series of carjackings - the card industry is giving the argument that if you didn't want to be carjacked, why weren't you locking your doors or taking a different road?" When the White House uses language like that, you know you're in trouble.

* The credit card problems also highlight a question nagging every trader in Manhattan: is this stock market rally for real? Daniel Och, one of the biggest hedge-fund managers in New York, doesn't think so. He's still got 35% of his $20 billion fund in cash and just wrote to investors: "The world will not just bounce back to where it was."

* No financial services firm is compete without a few Bloomberg terminals, but after years of growth, Bloomberg is sputtering along with the rest of the economy. So for the first time in its 23-year history, it has hired a chief marketing officer to improve the brand. Amazing to think Bloomberg got to be what it is without one.