WASHINGTON–Credit unions received two pieces of good news from Congress within hours on Monday, as two pieces of potential legislation opposed by CUs have died in committee.
Both the Credit Card Competition Act and a proposed 10% cap on card APRs have been rejected by the House committee.
Sen. Roger Marshall (R-KS) has announced he will no longer seek to offer the Credit Card Competition Act as an amendment to a digital assets bill in a markup slated for this week before the Senate Committee on Agriculture, Nutrition and Forestry. Credit union Hill advocates had earlier indicated they expected the amendment would ultimately not be added.
The markup had been scheduled for Tuesday, but it was moved to Thursday due to the winter storm that has affected the travel of many senators.
“America’s Credit Unions, leagues, and credit unions worked hard to keep Senator Marshall’s credit card swipe fee amendment off of the Senate Agriculture Committee’s crypto bill,” said America’s Credit Unions President and CEO Scott Simpson in a statement. “But, as we have said, attempting to attach these credit card mandates to a cryptocurrency bill does not change the underlying facts. The Credit Card Competition Act is bad policy that would disrupt a secure and well-functioning credit card system in ways that hurt consumers and small financial institutions while delivering a windfall to the largest retailers in the country. Forcing routing mandates into the payments system increases fraud risk, weakens consumer protections, and ultimately limits access to affordable credit for millions of credit union members. Lawmakers should continue to reject efforts to revive this flawed policy.
Feeling the ‘Consequences’
“Despite their mission-driven, not-for-profit structure, credit unions still felt the consequences of the 2010 Durbin Amendment on debit interchange, as price controls distorted the entire financial ecosystem,” Simpson continued in a statement. “Costs and lost revenues were shifted onto credit unions, weakening the very institutions that exist to serve working families and local communities. Highlighting the negative consequences of the Credit Card Competition Act were the focal point of America’s Credit Unions and our league partners’ strategic engagement with Senate Agriculture “
Nearly 4,000 Messages Sent
According to America’s Credit Unions, Committee Chairman John Boozman (R-AR), fellow committee members and other members of Congress received more than 3,700 direct messages in less than two weeks from credit unions expressing opposition to the Credit Card Competition Act being added as an amendment.
As The CU Daily reported, Sens. Dick Durbin (D-IL) Roger Marshall R-KS) and Peter Welch (D-VT) had been working to have the interchange-related legislation, which is widely opposed by the financial services industry, added to the digital assets bill—a move the Defense Credit Union Council called a “backdoor maneuver.”
But even prior to Marshall’s announcement, the credit union trade groups also did not expect the amendment to make it as far as the front door. The committee has 12 Republican members and 11 Democrats, and Marshall would likely have been the deciding vote, noted Jason Stverak, chief advocacy officer with the Defense Credit Union Council. Even if the bill emerged from the committee on a 12-11 vote and headed to the full Senate, the digital assets bill would not pass the chamber due to the amendment, according to Stverak.
‘Unlikely to Be Included’
Given that the digital assets bill is a signature piece of President Trump’s financial services agenda and Republicans do not want to see it scuttled, which is among the other reasons CCCA was unlikely to be included, he said.
One potential offramp for the controversial CCCA amendment, according to Stverak, would have been for committee Chairman John Boozman (R-AR) to rule that it is not germane and should instead be debated in the committee of jurisdiction, the Senate Banking, Housing and Urban Affairs Committee—a point raised by both America’s Credit Unions and the Defense Council in letters sent to Capitol Hill over the weekend.
A ‘Poison Pill’
“I believe the chairman has made it clear that he does not think the legislation will advance if they assert what is essentially a poison pill amendment,” said Greg Mesack, senior vice president of advocacy with America’s Credit Unions, during a media call ahead of Marshall’s announcement “They’re working very hard to make that a bipartisan bill. They’ve still got some work to do to get it there, but he wants it to be a bipartisan bill focused on creating new rules for digital assets, and inserting a nongermane credit card interchange amendment would basically serve as a poison pill. He does not think he can get it to the Senate floor.”
Complicating matters is that a companion digital assets bill is also working its way through the Senate Banking Committee. There are two bills because the two committees have oversight of different regulators charged with overseeing cryptocurrencies and digital assets.
The Senate Banking Committee’s markup of its bill has been delayed as it works through remaining details.
Why It Matters to Credit Unions
Mesack said credit union trade groups have worked to ensure credit unions are included in the digital assets legislation, giving them flexibility as the market evolves.
“Digital assets are playing a bigger role in the day-to-day lives of everyday consumers, including credit union members, so it’s something we’re keeping an eye on,” he said. “It’s important to provide clarity and updated regulatory structures. These assets are going to play a bigger and bigger role in the global economy.”
Modifications in the CCCA
While the amendment appears dead for now, it should be noted that the new version of the CCCA included changes from earlier iterations of the bill, Stverak said. A primary change would remove the Federal Reserve as the regulator responsible for promulgating interchange rules and instead give state attorneys general authority to bring actions and enforce them.
“Republicans have concerns with Democratic activist attorneys general, and Democrats have concerns with Republican activist attorneys general,” Stverak said. “That’s a big red flag.”
No Credit Card APR Cap
Separately, in the second piece of good news for credit unions in Congress, the House Financial Services Committee markup on Monday advanced without any language that would have mandated a credit card interest rate cap.
As the CU Daily has been steadily reporting, a proposed 10% cap on credit card APRs for one year gained life after President Trump expressed support for it in a social media post. The idea of such a cap has created some strange bedfellows, with Sen. Elizabeth Warren (D-MA), usually a strong opponent of the president, also declaring her support.
‘A Growing Understanding’
“We appreciate the Committee’s work during today’s markup to advance bipartisan legislation that modernizes outdated thresholds and reduces unnecessary regulatory burden on community-based financial institutions,” America’s Credit Unions President and CEO Scott Simpson said in a statement. :While a national credit card rate cap amendment was raised during the markup, it was not advanced. That outcome reflects a growing understanding that hard price controls are not an effective way to improve affordability for consumers. Rate caps do not eliminate the underlying costs of providing credit. They simply shift those costs and restrict access, particularly for working families and consumers with thin or imperfect credit histories.
“We urge lawmakers to remain focused on policies that expand access to fair, affordable credit and avoid proposals that risk undermining the very consumers they are intended to help,” Simpson added.
