This week, credit unions doubled-down their advocacy efforts on two major legislative threats in Washington D.C. — the Credit Card Competition Act (CCCA) and a proposed 10-percent credit card interest rate cap.
California’s and Nevada’s Credit Unions have mobilized Connect For The Cause to help staff, volunteers, and advocates oppose these legislative efforts on Capitol Hill to protect credit unions and their members. Please make your voice heard if you haven’t.
Advocates have already sent several messages to Congress, but opposition must be strengthened to make sure credit unions’ voices aren’t ignored.
The Credit Card Competition Act has entered an important phase in the U.S. Senate — a bill mandating that card issuers with $100 billion or more in assets provide at least two routing networks. It is being championed by Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL). Please make your voices heard today through Connect For The Cause to oppose the measure.
This past week, Marshall intended to introduce the CCCA as an amendment to the Clarity Act, a cryptocurrency market structure bill, during the Senate Agriculture Committee markup. He originally suggested he may vote “no” on the Clarity Act and potentially stall its advancement unless the CCCA is addressed, but the senator changed his mind.
Meanwhile, President Donald Trump’s vocal social media support, combined with Vice President JD Vance’s history as a vocal co-sponsor, has increased the likelihood of the CCCA being attached to “must pass” legislative packages.
Proponents claim the CCCA will lower prices, but credit union advocates point to the 2011 Durbin Amendment as a cautionary tale. While marketed as a break for smaller financial institutions via threshold regulation, history shows that market pressures eventually pull smaller credit unions into the same pricing spiral.
Credit unions have identified several risks for consumers, starting with a surge in fraud. Since the Durbin Amendment took effect, fraudulent debit transactions have doubled according to America’s Credit Unions. Because the CCCA mandates routing standards but lacks data security requirements, it increases the likelihood that fraud losses will be passed directly to consumers.
Additionally, consumers may face significant point-of-sale inconveniences, as they could be turned away by merchants if their card does not support the retailer’s preferred cheapest payment network. Research also suggests a broader economic impact where small businesses could lose up to $1 billion in card rewards, while consumers see zero savings at the cash register, with benefits flowing to big-box retailers.
The California and Nevada leagues will keep credit union leaders informed as the situation progresses.
The momentum for a one-year, 10-percent APR cap on credit card interest rates accelerated following Trump’s recent remarks at the World Economic Forum in Davos, Switzerland.
Shifting from previous rhetoric suggesting administrative enforcement, the president called on Congress to enact a formal one-year federal cap. Characterizing rates of 28 to 32 percent as “usury,” he cited high interest as a primary barrier to American prosperity and homeownership.
In a show of bipartisanship, Rep. Maxine Waters (D-CA), ranking member of the House Financial Services Committee, echoed the president’s sentiment. During a recent committee markup of H.R. 7056 (Community Bank Regulatory Tailoring Act), Waters introduced an amendment to codify the 10-percent cap, focusing her criticism on profit margins at the nation’s six largest banks.
While the amendment was ultimately ruled “not germane” and didn’t receive a vote, credit union leaders remain on high alert. Advocates argue that a rigid cap ignores the safety and soundness of financial institutions. Unlike the mega-banks cited by Waters, credit unions are member-owned and already operate under a statutory 18-percent cap, with average rates at roughly 12.8 percent.
Some say the introduction of the amendment may have been performative to highlight dissonance among the Republican party. Trump is calling for a 10-percent credit card interest rate cap, yet his own party will not advance a measure to achieve that. The amendment was introduced in the committee room after most members of Congress had left.
California and Nevada’s Credit Unions and America’s Credit Unions have argued that an arbitrary 10-percent ceiling would force institutions to cut services, introduce annual fees, or pull back from higher-risk borrowers, effectively shrinking credit access for families of moderate means.
