There are nearly three million people working for the federal government. Most of these employees work behind the scenes and play vital roles in keeping the functions of government running smoothly. Some, however, work closely with elected or politically appointed officials and have the ability to mold regulations and inquiries to fit a bigger political agenda.
Right now, Sen. Dick Durbin of Illinois and Sen. Roger Marshall of Kansas are using their White House and Biden Administration allies to deploy the power of the regulatory state against those opposing legislation their supporters are backing.
The largest corporate mega-stores in the country like Walmart and Home Depot have long supported Senators Durbin and Marshall for years. And now, they are now supporting the Senators’ legislation. The Durbin-Marshall Credit Card bill helps large retailers by placing credit card routing mandates on Americans’ credit cards. These new mandates could make things cheaper for retailers short-term but put consumers at great risk for fraud long-term. Consumers aren’t the only ones who lose. The community banks and credit unions who support the current credit card system are also opposed.
These financial institutions will have to scale back what they offer their customers if Sen. Durbin, Sen. Marshall and their corporate allies have their way. The mandates will put credit card rewards programs and anti-fraud programs in jeopardy. This will hurt consumers’ budgets directly, while the largest retailers’ profits will continue to grow.
The travel industry, including all the major airlines, as well as credit unions, community banks, and the card networks have all spoken out against this bill. But this has put a target on their backs.
Passing this bill would be a big win for Sens. Durbin, Marshall and their supporters. When it faces resistance, they enlisted the White House to help out and target anyone opposing these mandates.
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One illustration of this is the Department of Transportation and CFPB suddenly investigating airlines’ frequent flier programs. They are looking for “unfair and deceptive practices” and are weaponizing their regulatory power to threaten political opponents.
It certainly pays to have friends in high places.
Sen. Durbin didn’t become one of more powerful men in the Senate fighting fair. He’s already accused the head of United Airlines of lying about how detrimental this bill will be to rewards programs.
But the latest research shows that the travel industry and people who work in tourism will be directly hit by this bill. Airlines for America, which represents the major US airlines, latest analysis shows that there are 30 million airline credit card holders in the United States. These cardholders are able to earn points that can be used to purchase tickets. This has resulted in 15 million trips in the United States, and in 2022 this added up to $23 billion in economic activity.
The research also showed that in Sen. Durbin’s home state of Illinois alone there are more than 6,000 jobs that are supported by airline credit card points. That’s a lot of people visiting the Windy City thanks to their airline credit cards.
It’s also not just the travel industry that will be hurt by these mandates and investigations. It’s also consumers who rarely fly, but instead may use credit card rewards programs to make everyday purchases for their families, like food or gas.
Credit unions and community banks are also the targets of this legislation. For years they have invested in new technology to help fight fraud using AI and other tools. These mandates will expose their customers to untested and unprotected networks. The mandates will also suck dry their interchange revenue, which is necessary to help fund lines of credit for their members. This will mean less credit available for those just starting out with their first credit card or loan application.
When the federal government and its regulatory power becomes a political tool, America is headed in the wrong direction. In fact, Sen. Marshall himself knows how problematic it is to engage in this type of fighting—he sponsored the Don’t Weaponize the IRS Act in 2021. A lot can change in a few years, I guess.
It’s now up to the rest of the Senate to speak out against this behavior and vote no against the Durbin-Marshall Credit Card bill.
Richard Hunt, Executive Chairman, Electronic Payments Coalition
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