December 16, 2022 

MBA: Don’t Let Congress Shatter Your Credit Card Rewards!

MBA continues to raise awareness about the potential for the Credit Card Competition Act to advance through the U.S. Senate. Although the measure was not included in the NDAA, there is still potential for it to pass as a stand-alone bill or as an amendment to other legislation.

This legislation, sponsored by Sens. Dick Durbin, D-Ill., and Roger Marshall, R-Kan., would dramatically reduce interchange income from credit card transactions while increasing security and fraud risk. MBA has been staunchly opposed to this bill since its introduction.

“Much like the first Durbin amendment that made debit card rewards economically infeasible, this amendment would do the same to credit card transactions as reductions in interchange income make the programs unsustainable,” said MBA President Jackson Hataway.

MBA launched a social media campaign to remind consumers that this act will end credit card rewards and encourages its members to contact Sens. Roy Blunt and Josh Hawley to oppose the measure. MBA also encourages banks to share its posts on Facebook, Twitter, LinkedIn and Instagram.

MBA: Tell FHFA to Update Capital Regulations for FHLBs

MBA joined state banking associations to submit a letter to Federal Housing Finance Agency urging the agency to align the capital requirements for Federal Home Loan Bank members with those of the banking agencies.

MBA has been urging FHFA to modernize its guidelines with a focus on Tier 1 Regulatory Capital that is used by the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency.

“We have been engaged on this issue since it first emerged, discussing the problem with FHLB Des Moines and in congressional visits during October,” said MBA President Jackson Hataway.  

During its regional meetings this fall, MBA heard that prudential regulators were unlikely to supply the “comfort letters” enabling banks to access FHLB advances. Pressure on FHFA has increased dramatically since that time.

“Banks cannot be silent on this issue,” Hataway said. “FHFA’s reliance on tangible equity misaligns it with all other prudential regulators and presents a dangerous and unnecessary limitation on bank’s ability to access liquidity as we enter economic headwinds.”

MBA encourages its members to urge FHFA to update its capital requirements.

MBA Shares Overview of State Legislature Leadership

Both the Missouri Senate and House will be under new leadership when the session kicks off Wednesday, Jan. 4.  Sen. Caleb Rowden, R-Columbia, has served as majority floor leader the past two sessions but will ascend to the president pro tem position. Taking Rowden’s position as majority floor leader is Sen. Cindy O’Laughlin, R-Shelbina. On the House side, Majority Floor Leader Dean Plocher, R-Town and Country, will now serve as the speaker. Rep. Jon Patterson, R-Lee’s Summit, was elected to serve as majority floor leader.

Leadership positions for the Democrats will not undergo change. Sen. JJ Rizzo, D-Kansas City, will remain minority floor leader in the Senate, and Rep. Crystal Quade, D-Springfield, was re-elected to the minority floor leader position in the House. Both Rizzo and Quade have served in those positions for the past two years.

A full list of leadership in both chambers is posted on MBA’s website.

ABA, Associations Seek Summary Judgment in CFPB Lawsuit

The American Bankers Association and six other trade groups have asked a federal court in Texas to grant summary judgment in their lawsuit against the Consumer Financial Protection Bureau. The lawsuit says the CFPB exceeded its legal authority under the Dodd-Frank Act and failed to follow proper administrative procedures when it expanded the definition of “unfairness” to encompass discrimination in the unfair, deceptive, or abusive acts and practices exam manual.

“It appears that ABA and the other parties to this case, including the CFPB, are expediting the lower court proceedings by focusing their motions and arguments to the key legal questions in order to bring the case to the U.S. Supreme Court as soon as possible,” said MBA General Counsel Keith Thornburg.

The plaintiffs also included a challenge to the CFPB’s funding structure, which bypasses the appropriations clause of the U.S. Constitution. The latter point mirrors another federal case decided in October that found the CFPB’s funding structure violates the appropriations clause. The earlier case is also headed to the Supreme Court.

“The CFPB’s blatant disregard bypassing proper administrative procedures violates its legal authority,” Thornburg said. “These lawsuits seek to ensure the CFPB operates within its scope intended by Congress.”

Retiring Senator Introduces Bill to Restructure CFPB

CFPB director testifies before Senate, House committees
Senate Republicans are taking aim at the Consumer Financial Protection Bureau’s structure, namely its funding and leadership.

Senate Banking Committee Ranking Patrick Toomey, R-Pa., who is retiring at the end of this year, said he is introducing legislation with Sen. Bill Hagerty, R-Tenn., to put the CFPB on appropriations and replace its single director with a five-member bipartisan board, similar to the Federal Deposit Insurance Corp. The bill is titled the CFPB Stability Act.

“Under Director Chopra, the CFPB is more out of control than ever,” Toomey said. “The CFPB Stability Act will make the agency constitutional and accountable to Congress and the American people.”

Democrats shot back, arguing that the agency is already subject to enough oversight. Committee Chairman Sherrod Brown, D-Ohio, said “the CFPB director can be fired by the president” and that the agency is held accountable in other ways, such as having the director confirmed by the Senate and the fact that its subject to audits by the private sector and the U.S. Government Accountability Office.

Republicans also focused on a recent decision from a lower court that the CFPB's funding structure is unconstitutional. The agency has since appealed that decision to the Supreme Court. If upheld, the decision could wipe out the current mechanism by which the agency, by the sole discretion of its director, draws its funding from the Federal Reserve. It also could have the impact of invalidating all of the enforcement actions and guidance the CFPB has undertaken since its inception under the Dodd-Frank Act.

On Wednesday, Chopra testified before the House Financial Services Committee. Missouri Congressman Blaine Luetkemeyer said “the bureau has shown a willingness to operate and regulate by any means other than those that are legally and ethically appropriate. … The courts have already begun to chip away at the bureau’s illegal framework and actions. It’s long past time that Congress do our part.”

At the beginning of the hearing, Ranking Member Patrick McHenry, R-N.C., told Chopra, “Next month there will be a new majority in the House of Representatives. I think you’ll wish you tried harder to play by the rules.”

Federal Reserve Raises Interest Rate

The Federal Reserve voted Wednesday to raise its target interest rate by 50 basis points. Although this is a smaller increase than the 75 basis point increases approved at the past four meetings, the Fed continues to signal that rate increases will be necessary to tame inflation throughout 2023. This move places the federal funds rate at a range of 4.25% to 4.5%.

Increases in 2023 will likely move the federal funds rate over 5%, with many analysis projecting three 25 basis point increases ahead. Chairman Jerome Powell reiterated the Fed will not stop tightening until it sees convincing indications that inflation is subsiding. The past two months have seen improvements in certain inflation metrics.

At MBA’s Executive Management Conference last week, economist Chris Kuehl predicted that despite the two months of improvement, the Fed would remain on message in its plan for rate hikes and highlighted that wage inflation and the tight labor market are critical factors in how the Fed evaluates whether its approach is having the intended effect.