Hawley Sponsors Damaging Legislation Endangering Missouri Consumers, Businesses

The Missouri Bankers Association called out Sen. Josh Hawley for “endangering the privacy and finances of Missourians by co-sponsoring a bill that will have devastating impacts for consumers and small businesses.”

In an op-ed, MBA President and CEO Jackson Hataway said Hawley is siding with Illinois Democrat Sen. Dick Durbin in supporting government mandates for credit card routing networks. If the senators succeed in passing the deceptively named Credit Card Competition Act, Hataway said “consumers will suffer catastrophic consequences.” The bill eliminates popular products like cashback and rewards programs, exposes “every credit card user to detrimental security risks” and “props up highly profitable big-box retailers.”

“Bill sponsors claim the legislation will result in lower prices for consumers, but this is the furthest thing from the truth. Big-box stores reaped massive profits from the fee caps on debit card transactions in the 2010 Durbin Amendment. Did they pass those savings to consumers? No, they pocketed the money,” Hataway wrote. “Why would we, or Hawley, expect this time to be different?”

MBA encourages its members to contact Sen. Eric Schmitt and U.S. representatives to recognize and oppose “this bill for what it really is — a poorly veiled effort by the largest merchants in the country to grow their profits.”

Luetkemeyer Sponsors Bill Requiring Fed to Analyze Impact of Reg II Proposal

Congressman Blaine Luetkemeyer has filed legislation that would require the Federal Reserve to perform a thorough economic analysis of its proposed changes to Regulation II before finalizing the rule.

Last fall, the Fed voted to significantly lower the cap on debit card interchange fees earned by banks. The Fed is proposing to revise Regulation II to lower the cap from its current rate of 21 cents and .05% of the transaction, plus a 1-cent fraud prevention adjustment, to 14.4 cents and .04% per transaction and a 1.3 cents fraud prevention adjustment, effective June 30, 2025. It also would institute a new process in which the cap is revised every two years.

The Secure Payments Act of 2024 sponsored by Luetkemeyer directs the Fed to measure the proposal’s impact on consumers, including access to affordable debit accounts, and review of the primary beneficiary of the interchange cap.

“We want to applaud Rep. Luetkemeyer for introducing the Secure Payments Act, a bill that would prevent the Federal Reserve from moving too quickly and taking damaging missteps as it considers further limitations to debit interchange rates,” said MBA President and CEO Jackson Hataway. “The Fed's proposal would have a dramatic impact on the availability of no or low-cost debit and checking products and would disproportionately burden the lowest income consumers. It is our hope that Congress will support Rep. Luetkemeyer and require the Fed to undertake a much more data-driven, comprehensive and thoughtful approach to a proposal that will impact millions of Americans.”

Luetkemeyer questioned Federal Reserve Chairman Jerome Powell yesterday during a House Financial Services Committee hearing. He asked Powell about the potential for the rule change to harm low- to moderate-income individuals by making it more difficult for banks to provide affordable banking services. Powell said the rule is still out for public comment, and that federal law requires the Fed to make a decision on the cap.

Luetkemeyer also co-led a bipartisan group of 38 members of Congress, including Congressman Emanuel Cleaver II, in expressing their views to the Federal Reserve about how its proposal could harm financial inclusion for low- and moderate-income consumers.

MBA urges bankers to contact their representatives to support Luetkemeyer’s bill and to urge the Federal Reserve to oppose lower rate caps on debit interchange. The Fed is accepting comments on its proposal until May 12.

Cleaver Asks CFBP, NCUA to Investigate Lending Practices of Navy Federal Credit Union

Congressman Emanuel Cleaver II, ranking member of the House Financial Services Subcommittee on Housing and Insurance, is urging the Consumer Financial Protection Bureau and National Credit Union Administration to investigate Navy Federal Credit Union’s lending practices.

In his letter to the agencies, Cleaver said, “Because of the asset size of Navy Federal, both the NCUA and CFPB have a legal obligation to supervise Navy Federal for compliance with fair lending laws, to make a referral to the DOJ if they have reason to believe the credit union had engaged in a pattern or practice of discrimination, and to engage in any appropriate supervisory or enforcement action.”

As previously shared by MBA, recent media reports found that Navy Federal Credit Union had turned down large volumes of mortgage applications from Black applicants. Cleaver is leading efforts with the House Financial Services Committee and Congressional Black Caucus demanding answers from the credit union. More House lawmakers, including the New Democrat Coalition and Congressional Hispanic Caucus, have called on federal regulators to investigate the credit union’s practices.

“The shocking discrepancies in Navy Federal’s mortgage approval rates demonstrate the real, undeniable need to bring the same CRA requirements to credit unions that banks have adhered to for decades,” said MBA President and CEO Jackson Hataway. “It is unconscionable that Navy Federal has been able to grow to such a massive size through its tax advantaged status but has never had to adhere to the kinds of statutory requirements specifically designed to prevent these kinds of issues. I applaud Congressman Cleaver and his colleagues on their actions and encourage the House Financial Services Committee to hold a hearing on this issue immediately.”

ABA Files Lawsuit Challenging CFPB Credit Card Rule

The American Bankers Association today joined the U.S. Chamber of Commerce and four business groups in filing a lawsuit in federal court challenging the Consumer Financial Protection Bureau’s new rule limiting credit card late fees. The plaintiffs also are seeking a preliminary injunction barring the bureau from implementing the new rule.

Earlier this week, the CFPB released its long-awaited rule on credit card late fees that amends Regulation Z. It directly applies to those with one million or more open credit card accounts and adopts a late fee threshold of $8. The effective date of the final rule is 60 days after publication of the rule in the Federal Register.

The lawsuit challenges the proposed regulation for credit card late fees, which slashes late fees by 75% by dropping the so-called safe harbor from $30 to $8. The complaint raises several issues and relates that the CFPB may have been improperly influenced before initiating the rule change by President Biden’s State of the Union Address in 2023 that targeted these fees and this regulation.

"The proposed rule appears to completely disregard Congress’ charge under the CARD Act that late fees constitute penalties that should be 'proportional and reasonable' to deter conduct that undermines safety and soundness of our financial system and that can lead consumers to deleterious conduct that harms their finances and credit," said MBA General Counsel Keith Thornburg. "Instead, the CFPB focused only on the ability of card issuers to cover costs of addressing late payments, with no consideration for the overall impact on card services, credit pricing and availability. Ultimately, the rule will increase credit costs for everyone and reduce access for many, harming all consumers who the CFPB is charged to protect.”

In a message to MBA-member bank leaders this week, MBA President and CEO Jackson Hataway said the rule should come as no surprise, given the history of CFPB Director Rohit Chopra toward our industry.

“Rather than seriously considering industry concerns about access to credit for lower-income Americans and the viability of a competitive credit card marketplace, Chopra has once again decided to pursue damaging rulemaking for publicity purposes,” Hataway said.

He added that this rule is bad for consumers, businesses and banks. Although there is a threshold in the final rule, “it is easy to see how market forces will require all issuers to meet these standards or abandon the market. It will increase the overall cost of credit for all consumers while driving more providers out of the market.”

Hataway said it’s even more concerning that this rule will force unbanked and underbanked populations to move closer to predatory entities to serve their credit needs.

“The CFPB’s irresponsible and divisive rhetoric around this issue, as well as all of the areas of banking at which its constant barrage of press releases and guidance documents are aimed, will ultimately do the most harm to the very consumers it was created to protect,” he said.

 MBA staff is reviewing the final rule in detail.  

U.S. District Court Rules Corporate Transparency Act Unconstitutional

A U.S. district court in Alabama has ruled the Corporate Transparency Act is unconstitutional because it exceeds the U.S. Constitution’s limits on Congress’ power.

In its decision, the U.S. District Court for the Northern District of Alabama permanently enjoined U.S. Treasury Secretary Janet Yellen, the U.S. Treasury Department and its agencies from enforcing the CTA against the plaintiffs in this case. The order is subject to post-trial motions and may be appealed within 60 days. Thus, the Treasury could request that the order be stayed for an appeal.

The challenge to the CTA was brought by the National Small Business Association, which has 65,000 members across the country. The CTA has an immense impact on an estimated 32 million businesses that would be subject to the reporting requirements. One named individual plaintiff as a representative of the business owners or incorporators was Isaac Winkles. The court found that both plaintiffs have standing to bring the suit.

There were no contested facts, and the court ruled on the cross motions for summary judgment presented by the parties. U.S. District Judge Liles C. Burk issued a 53-page opinion finding no enumerated power in the Constitution to support Congress’ authority to enact this law.

The government argued that authority could be found under Congress’ authority under the Commerce Clause and under foreign affairs powers, as well as for the efficient administration of taxing powers. The court rejected all these arguments. The most substantial portion of the opinion was addressed to the Commerce Clause.  The Case No. is 5:22-cv-1448.

The Treasury has indicated that its position is that the decision only impacts reporting by the individual plaintiff and the members of the NSBA.