PLANO, TEXAS, Oct. 4, 2022 – Cornerstone League last week drafted and issued a letter to all members of the Texas delegation opposing legislation that seeks to create new routing mandates that would affect the way financial institutions issue credit.
Cornerstone’s Texas advocacy arm, Texas Credit Union Association, joined Independent Bankers Association of Texas, Credit Union Coalition of Texas, and Texas Bankers Association in presenting a unified opposition to the Credit Card Competition Act of 2022.
In the letter, the trades say that the legislation is “anti-free market legislation that creates a government-mandated system for private contracting entities,” countering claims by the legislation’s supporters that it will lower credit card processing fees, saving merchants and consumers money.
The Credit Card Competition Act was introduced in July by Senators Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.), followed by the late September unveiling of the House companion to the bill by Representatives Peter Welch (D-VT) and Lance Gooden (R-TX).
The letter 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.”
“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 League President/CEO Caroline Willard said: “In a world where they’re [financial institutions] already burdened with quickly changing compliance and regulation laws, forcing this untested strategy upon them is unnecessarily risky.”
Resource One Credit Union President/CEO Mary Beth Spuck said in a recent Dallas Morning News op-ed that the legislation can cause banks and credit unions to incur significant expenses.
“Those costs can be substantial — and in our case, come directly out of the pockets of our more than 67,000 member-owners in the Dallas area and north Harris County. Last year, we reported losses due to fraud of nearly $500,000. A less-secure card processing network could send those losses higher,” she wrote.
Cornerstone League is among the nation’s largest regional credit union trade associations, serving approximately 500 credit unions in Arkansas, Oklahoma, and Texas. Cornerstone exists to advance the success of credit unions in the region through legislative and grassroots advocacy; regulatory and compliance support; training, educational, and networking opportunities; essential communications related to news and information affecting the credit union industry; and other products and services that establish Cornerstone as the essential partner for credit unions. For more information, visit cornerstoneleague.coop.