Bank trade groups have united to oppose an amendment that would cap credit card interest rates at 10%.
The groups, including the American Bankers Association as well as the Bank Policy Institute and America’s Credit Unions, sent a joint letter to U.S. Senate leaders last week saying the legislation could “eliminate access to credit cards for millions of consumers.”
The amendment to the GENIUS Act stablecoin bill pending before the U.S. Senate was proposed by Republican Sen. Josh Hawley, also on behalf of Independent Sen. Bernie Sanders. The bipartisan pair teamed up earlier this year to introduce legislation that would impose such a cap over five years.
The bank interest groups contended, citing research in certain states and other countries, that a credit card interest cap would hurt the very consumers it’s meant to help by decreasing their access to credit services. Presumably, financial institutions would find the cap so costly that they would cut other services.
“This amendment would eliminate access to credit cards for millions of consumers and drive them to sources of credit which are far more costly and less regulated,” the bank organizations wrote in the May 21 letter to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer.
While the GENIUS Act was sponsored by Republicans in the Senate, it has also received limited support from some Democrats this month. Now, lawmakers have offered a slew of amendments to the bill, though some may be rejected.
The bank trade groups argued in a May 21 press release that the Hawley amendment would act as a “poison pill” and thereby doom the GENIUS stablecoin legislation.
Nonetheless, the bank trade groups suggested they are interested in reducing the negative consequences of some consumers’ rising credit card expense as well as the lack of access to credit for some consumers.
“As responsible and well-regulated financial institutions, we share the goals of reducing the cost of consumer credit and increasing financial inclusion,” the letter said. “Unfortunately, the 10 percent rate cap proposed in this amendment would stifle our shared financial inclusion goals, reduce access to credit, and push consumers to far more costly and less regulated lenders.”
In a separate May 21 press release, many of the same bank trade groups also objected to another proposed GENIUS Act amendment – one offered by Republican Sen. Roger Marshall and mirroring the Credit Card Competition Act legislation – as damaging to the legislation’s prospects. The group also wrote a letter to congressional leaders to voice their opposition to that amendment. The CCCA bill is aimed at introducing more competition into the credit card network market dominated by Visa and Mastercard.
