May 20 (Bloomberg) -- American Express Co. Chief Executive Officer Kenneth Chenault said U.S. legislation to curb credit- card fees may reduce lending to “consumers who need it” and will hurt competitors more than his company.

The impact of the measure, passed by Congress today, will be “more negative than positive” for American Express, the largest U.S. credit-card issuer by purchases, because it may crimp the New York-based company’s ability to set prices according to risk, Chenault said today during a conference call.

“My concern is about credit being available, particularly to consumers who need it,” Chenault said. “We’ll be hurt less than our competitors because 80 percent of our revenues are generated from fees.”

President Barack Obama plans to sign the legislation to curb credit-card fees and marketing practices that legislators have called deceptive, White House spokesman Robert Gibbs said today. Card companies have said the new law may reduce profit, increase costs for customers and reduce perks. The Senate passed the credit-card measure yesterday, and the House gave it final approval today with a 361-64 vote.

In a separate conference call, MasterCard Inc. CEO Robert Selander told investors today the legislation will affect “every aspect” of how cards are marketed to customers, including those who pay on time.

American Express will adjust to the legislative changes and the U.S. recession, in which consumers are spending less and defaulting on loans more, by focusing on customers outside the U.S. and on its charge-card business, in which users pay off entire balances every month, Chenault said.

‘Zero Interest’

The company, which converted to a bank holding company last year to tap the government’s Troubled Asset Relief Program for $3.39 billion, has “zero interest” in becoming a full-service bank, Chenault said. The lender has enough access to cash by accepting consumer deposits through products including certificates of deposit, he said.

American Express slipped 81 cents to $23.98 at 4:15 p.m. in New York Stock Exchange composite trading. The lender has lost almost half its market value in the past 12 months. MasterCard, which has declined by more than a third in the past year, advanced 1.7 percent to $169.63 today.

The legislation would require lenders to apply payments to balances with the highest interest rates first. It would prohibit increasing a consumer’s rate on existing balances based on late payments to another lender, a practice known as “universal default.”

Interest-Rate Notice

It will also mandate 45 days’ notice before lenders can increase a card’s interest rate and prohibit retroactive rate increases on existing balances unless a consumer was 60 days late with a payment.

The U.S. economy is still shrinking and the “real risk” to it is a lack of credit, Treasury Secretary Timothy Geithner told the Senate Banking Committee today in Washington. The Treasury has about $124 billion left in the $700 billion TARP plan, including $25 billion in expected repayments over the next year, Geithner said.

The U.S. unemployment rate reached 8.9 percent in April, the highest since 1983. That month, 539,000 jobs were lost, the smallest drop in six months, as the worst recession in half a century started to ease and the federal government stepped up hiring for the next census.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Last Updated: May 20, 2009 16:32 EDT