[Chetry:] Welcome back to the Most News in the Morning. President Obama meets tomorrow with credit card company executives. And he's expected to push for protections against industry practices seen as predatory. Congress is also on the case. New Jersey Senator Robert Menendez is sending a letter to Treasury Secretary Timothy Geithner this week asking for help among other things. He wants to prohibit blanket rate increases. Also end what's called universal default, which can bump up your rate on one card if you are late on another. And also require that penalties and other fees be tied to their actual costs. Senator Menendez joins us now from Capitol Hill. Thanks for being with us this morning.
[Sen. Robert Menendez , New Jersey:] Good to be with you, Kiran.
[Chetry:] It affects almost everybody watching. The average home with credit cards carries a balance of nearly $11,000. Have you gotten any indication from the Treasury secretary that he will take action on your request?
[Menendez:] I think we're headed in the right direction. The meeting tomorrow with President Obama and the credit card industry leadership is an important one. I think that what the bill that passed out of the Senate Banking Committee, which I'm a member, was a very strong message, that we are headed in the direction of greater consumer protections. It's just fundamentally wrong that there are so many booby-traps and trapped doors in your credit card agreement that puts you as a consumer at risk. And with a trillion dollars that we have collectively in credit card debt in the country, this is an issue that at particularly at a time when families are continuously struggling that we just shouldn't see unilateral increases going through the roof for no good reason.
[Chetry:] Yes, although, as we talked about, as you just mentioned these bills going through the House and the Senate, some of these have come up before and died. How do you know they have a real chance this time of getting through?
[Menendez:] Well, actually, this is the first time that credit card legislation has gone through the Senate Banking Committee.
[Chetry:] Right.
[Menendez:] From the chairman, though, in over a decade. So I think that's a pretty strong statement. And I think you hear a human cry across the country from constituents. I certainly do. I have one constituent told me, look, I've been a perfect credit card payer. I have paid on time, and they just raise my interest rates from 8 percent to 29 percent. That's just simply is not acceptable.
[Chetry:] Yes, you know, it's interesting that some of the companies are defending themselves. Bank of America saying in a statement that 90 percent of their customers did not see a rate increase last year. They took bailout funds and reported total earnings of about $4 billion in the first quarter. But then they say they lost nearly $2 billion in the credit card division. Is there a danger that perhaps, if a plan like this passes, the recovery may take longer, some these banks may struggle a little bit more to try to get back into the black?
[Menendez:] Well, even before the credit card companies and the banks were facing these challenges, these practices were going on. And there's a difference between a credit card holder who either defaults andor is consistently late, there should be reasonable increases in that person. But for the wide universe of people who have not defaulted, are on time, and yet see their interest rates rise, it just simply not acceptable. And finally, you know, in essence as taxpayers were paying twice. Were paying once in terms of trying to help these financial institutions be solved. And at the same time, we're paying in higher interest rates that have no rational reason to our particular performance.
[Chetry:] Industries also trying to say that they need to do this in some cases to make money. They say they are at a 20-year high for uncollectible debt. And a 17-year high for late payments. So isn't there also some responsibility I totally get what you're saying about jacking up these rates arbitrarily. But some responsibility on the part of people who are using, you know, credit and not paying and trying to stop relying so much on credit.
[Menendez:] Well, there's no question that, you know, there is individual responsibility here. And there's no question that we have to be stewards of our own person financial fate. But if I, for example, have an excellent credit card history, I pay on time, and in fact I have no reason for my interest rates to be jacked up arbitrarily, or if I might be a day late on my electric bill because I was traveling and you use that reason to raise my rates, something we call Universal Default.
[Chetry:] Right.
[Menendez:] Or if you're oversoliciting my son and daughter who don't have the wherewithal to have really a credit card and you're going after them, the industry has to be responsible as well. There is personal responsibility, but there's also industry responsibility here.
[Chetry:] Hopefully you guys will get some action on this, this time. Senator Robert Menendez, thanks so much for joining us this morning.
[Menendez:] Thank you.
[Roberts:] It's 28 12 minutes now after the hour. We're following breaking news this morning. CNN has confirmed the acting chief financial officer of mortgage giant Freddie Mac killed himself this morning. Forty-one-year-old David Kellermann's body was found inside his Virginia home a short time ago. A spokeswoman for Freddie Mac tell CNN it was a suicide. According to Freddie Mac's Web site, Kellermann was with the company for more than 16 years. And named acting chief financial officer in September. We're following this story and we'll have much more on that as it comes in. Right now, Washington reportedly drafting plans to help Mexico combat brutal drug trade violence. According to "USA Today," the U.S. is planning to send up 300 former law enforcement agents to Mexico to create an academy where thousands of Mexican investigators will be trained in among other things narcotics, weapons trafficking and money laundering. And pay attention, Mr. President. People who use nicotine chewing gum to help quit smoking may want to try another way. According to the "Times of London," research now suggests that nicotine chewing gum, lozenges and inhalers designed to help people stop smoking may actually have the potential to cause cancer. Well, a couple of big stories surrounding Intelligence to tell you about this morning. President Obama now not ruling out potential prosecution for people who authorize the harsh interrogation tactics that were used against suspects caught up on the war on terror. And as well now, Congresswoman Jane Harman answering questions about what she was talking about on a warrantless wiretap that the NSA picked her up on. She is saying the fact that she was caught on that wiretap was an abuse of power. Joining me now to talk more about this on the phone is CNN senior legal analyst Jeffrey Toobin. So, Jeffrey, you know what's being said. Congresswoman Jane Harman, a member of the Intelligence committee, saying it's an abuse of power that she was wiretapped, but then at the same time other people asking questions, well, what did she say in that wiretap related to two people from the America Israel Public Affairs Committee and potential charges against them on espionage. Is she in trouble? Is this an abuse of power? How are you seeing it all, Jeffrey?
[Jeffrey Toobin, Cnn Senior Legal Analyst:] I think we have to know a lot more about both parts of this story. First of all, it doesn't sound like Harman herself was targeted. It sounds like she was picked up speaking to someone who was targeted. And that's a very different story and there would really be nothing sinister about that. But on the same token, the idea that she might have called an administrative agency or been asked to call an administrative agency, like the Justice Department, to complain about a case, that itself is no big deal either. That's what congressmen do. They call agencies and advocate on behalf of constituents. Now if there was some sort of direct quid pro quo, I will give you a campaign contribution, if you do that. Well there might be something wrong there. But that's a long way off from what the reporting is so far.
[Roberts:] All right. Now on these memos, these CIA memos that were released last week and as well the people who authorize the so- called harsh interrogation tactics that were used against suspects who were caught up on the war on terror, a bit of an about-face for the president who had said it serves no purpose to look back at what the Bush administration was doing on this front. Now not ruling out potential prosecution for people who authorize those interrogation tactics. Where is all of this headed?
[Toobin:] Well, I think here too there maybe be a little less than meets the eye. The usually smooth Obama administration, press operation, has offered a lot of mixed messages on this subject in the past couple of days. Just to go to the bottom line here, it's very unclear to me that there could be any criminal case made against the authors of these memos. There is not I am unaware of any prosecution ever for giving bad legal advice. This may be a bad idea. What I mean, this these may lead to bar association investigations. But an actual criminal case seems extremely unlikely. Now that doesn't mean that there wouldn't be some sore of truth commission, congressional investigation, non-criminal investigation. But an actual criminal case that looks like very much a long shot, notwithstanding what the president said yesterday.
[Roberts:] All right. Jeff Toobin, our senior legal analyst for us this morning. Jeff, thanks so much. Good to talk to you.
[Chetry:] A man who wrote a letter to the president about why he shouldn't smoke could get a surprise of his life. The president writes back. Michael Power sent the president his father's photo and told him that his father had died of cancer from smoking 30 years ago. He advised the president to stop so that he could be around for his little girl and the president sent back the photo in the plastic bag with this letter. "Thanks so much for the wonderful letter and the good advice. I'm returning the picture since it must be important to you, but I will remember your dad's memory."
[Roberts:] Now of course we have that news this morning as well that chewing nicotine gum, according to some reports, may be a precursor to cancer as well. So, Mr. President, it's time to put it all down, I think.
[Chetry:] Yes, exactly.
[Roberts:] This morning, new details of the so-called Craigslist murder. Police returning to the suspect's apartment as an alleged motive emerges. And new backlash over the Miss California controversy. The beauty queen bashing heats up online but how much is too much? It's coming up on 34 minutes now after the hour.