WASHINGTON–There is a bigger picture overshadowing why legislation such as the Credit Card Competition Act has suddenly gained new life, and it can be summed up in two words: affordability and November.
That’s because the congressional midterm elections will take place in less than a year, and the cost of living has become a centerpiece issue. Legislation that purports to be pro-consumer and to lower prices, such as the CCCA—which many challenge as a myth that will benefit retailers, not consumers—has become politically attractive to lawmakers in both parties.
“I think it’s safe to say the midterms are going to hang over every single bill that moves from now until November, because politics are getting more and more real,” said Greg Mesack, SVP-advocacy with America’s Credit Unions. “I think that’s one reason for the affordability agenda that the White House has been talking about.
Voters Aren’t Feeling It
“All good politicians, and the president is certainly an excellent politician, are looking at polling and consumer sentiment and seeing voters are worried, voters are unhappy, and voters aren’t feeling economic growth because of affordability problems we have in housing, food and health care,” Mesack continued. “I think you’re going to see affordability as a proxy factor in a lot of legislation.”
“We are now entering the season, as we come into February of an election year, where politics will hang over things as simple as which bills get moved based on whether a sponsor is in a tight election,” he added. “Politics will play a big role in this year’s legislative agenda. Luckily, for credit unions, we want an agenda that helps with affordability, because credit unions are the more affordable choice and offer more affordable products. Credit unions help people manage their finances and have a more pro-affordability, pro-consumer agenda.”
‘In Name Only’
America’s Credit Unions President and CEO Scott Simpson agreed, but warned the risk is that legislation framed under affordability can create affordability in name only.
“The Credit Card Competition Act is a classic example of that distinction,” Simpson said. “I think it’s up to Congress to sort through the politics of this. The reality is this is not a consumer protection bill; despite the fact it’s being lumped into and connected to rate-cap aspirations and consumer protection aspirations.
“It is an attempt by merchants and retailers to shift wealth to them. This is not going to benefit consumers at all,” Simpson added. “What we have to do is remind policymakers of the policy implications of what might be a political movement around rate caps versus interest versus interchange. It’s a classic example of the distinction between political objectives and sound policy objectives.”
