Cornerstone League joins Texas trades in opposition to interchange legislation

Cornerstone League’s advocacy arm, Texas Credit Union Association, joined Independent Bankers Association of Texas, Credit Union Coalition of Texas, and Texas Bankers Association in crafting a letter to lawmakers opposing the Credit Card Competition Act of 2022—an act that seeks to create new routing mandates that would affect the way financial institutions issue credit.

The Credit Card Competition Act was introduced in July by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), followed by the late September unveiling of the House companion to the bill by Reps. Peter Welch (D-Vt.) and Lance Gooden (R-Texas).

In the letter, the trades write, “[W]e strongly oppose this decidedly anti-free market legislation that creates a government-mandated system for private contracting entities. History has shown time and again that the unnecessary insertion of government mandates into the private sector do not work.”

The letter also points out shortcomings of the 2010 iteration of Sen. Durbin’s amendment to the Dodd-Frank Act: “… we now have more than 10 years of experience showing that all banks and credit unions—regardless of asset size—have been negatively impacted by the Durbin amendment’s transfer of debit routing decisions from banks and consumers to merchants.”

“Insured depository institutions have safeguarded our customers’ data for decades,” the letter reads. “Our customers and state and federal regulators demand nothing less. Our members are payments experts that are best positioned to protect customers against fraud, loss of private data, and the inefficiencies of unreliable systems. Merchants are not subject to the same rigorous data security standards.”

“The Credit Card Competition Act and the Welch-Gooden bill are misguided pieces of legislation that will do much more than hurt consumers,” said Jim Phelps, Cornerstone League EVP and chief advocacy officer. “The legislation not only will lead to retailers choosing less secure networks and putting consumers’ data privacy at risk, but it will also place unnecessary burdens on financial institutions.”

Since July, financial institutions, especially the credit union industry, have been vocal about their opposition. In a recent op-ed published on CUInsight, Cornerstone President/CEO Caroline Willard said, “In a world where [financial institutions] are already burdened with quickly changing compliance and regulation laws, forcing this untested strategy upon them is unnecessarily risky.”

View the letter.