Florida Banking December 2023

FIGHTING THE MISGUIDED CREDIT CARD COMPETITION ACT BY CONGRESSMAN BLAINE LUETKEMEYER

A midst record-high inflation, global conflict, and a heated presidential race, there is immense pressure on elected officials and regulators to take action and provide relief to Americans. In Congress, I’ve urged my colleagues to think about economic issues critically and avoid succumbing to dogma or the catchiest soundbites. As bankers are well aware, offering false promises to consumers while claiming to “hold banks accountable” is a hallmark of politicians chasing a headline without any regard for the practical consequences of their misguided policies. Perhaps the most notable recent example of

shows customers never saw any savings — only a loss of benefits. It begs the question: After 13 years with no evidence of benefits to the economy or everyday Americans, why are these efforts still popping up? Have they learned nothing? As far as I can tell the only lesson learned was how capping privately negotiated fees can only pass Congress when one party holds the White House, the House of Representatives, and a supermajority in the Senate, as was the case in 2010. Supporters of free markets largely disagree with government caps on private negotiations. So, to win support on

this is the Credit Card Competition Act, the latest attempt to eliminate credit card interchange fees. Since the Durbin Amendment in the 2010 Dodd-Frank law capped interchange fees on debit cards, proponents have pushed to do the same on credit cards. What they fail to acknowledge is how not a single consumer benefited from the debit

the Republican side of the aisle, those crafting the policy (lawyers and political consultants of the nation’s largest retailers) shifted from a cap to the much more palatable notion of competition. To their credit, it worked. The bill has Republican sponsors in both the House and Senate — but not nearly enough support

“THIS BILL WOULD STILL LEAD TO CUTTING SERVICES AND BENEFITS WITHOUT ACHIEVING SAVINGS FOR CONSUMERS.”

cap. In fact, it was just the opposite. Consumers who once enjoyed cash back or other rewards on their debit cards lost those benefits. Free checking largely disappeared, fees increased, and minimum balance requirements became more prevalent. While debating the Durbin Amendment, I was repeatedly told retailers would pass savings on to consumers, so at least the public is enjoying the savings, right? Like me, you probably knew then and you absolutely know now those benefits were never going to make it to consumers. Study after study

to pass the House. While some of the mechanics and messaging have changed, this bill would still lead to cutting services and benefits without achieving savings for consumers. In fact, this time around, the consequences would be even more devastating for customers. What proponents of the Credit Card Competition Act apparently do not understand is that services cost money. When you eliminate the ability to pay for a service, you eliminate the service itself. Interchange is no different. Reports about credit card rewards

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