In Case You Missed It…Republican & Democratic LeadersAgree: New Credit Card Mandates AreBad for Business, Bad for Consumers

WASHINGTON, DC—State Republican and Democratic leaders recently penned op-eds agreeing the Durbin-Marshall Credit Card Bill harms consumers, undermines local economies, and jeopardizes state governments that depend on the benefits of credit cards.

Craig Bieber, former Executive Director of the Democratic Party of Virginia, wrote in the Richmond Times-Dispatch, “[Minority] groups are also the ones most vulnerable to any increased restrictions on loans and credit. [The Durbin-Marshall Credit Card Bill] is an anti-union ploy that will hurt travel, small businesses and the diverse communities of our city, region and state.”

John McCuskey, West Virginia’s State Auditor, wrote in Real Clear Markets,

“[The Durbin-Marshall Credit Card Bill] will reduce the rebates West Virginia receives through its Purchase Card Program — and, potentially, reductions in the state and local government services that are funded in part by these rebates, leaving our taxpayers picking up the tab, or doing with less.”

Both op-eds can be found in full below:

When Lawmakers Prioritize Profits for Bix-Box Chains, Everyone Loses

By: Craig Bieber

Former Executive Director of the Democratic Party of Virginia

June 4, 2024

Richmond has one of the hottest job markets in the country, coming in at No. 11 out of nearly 400 cities. The Wall Street Journal examined to compile their latest rankings. It’s no surprise to me. I’ve worked for over 50 years in Virginia, and I know what a great place to live and work we have here. New businesses are opening up all the time and despite increasing costs employers are looking to hire. This doesn’t mean it’s easy out there in the job market, but we are doing a lot better than the rest of the country. In fact, in most industries in the capital city, wages are up.

Part of the reason for that is that Richmond, and our commonwealth, welcome entrepreneurs. As a former executive director of the Democratic Party of Virginia, let me emphasize just how proud I am of the work the Democratic Party, its legislators and local leaders have done to make sure our state has a welcoming business environment, while also continuing the fight to fortify workers’ rights. We also have a strong history of racial minorities owning and operating their own businesses. The immigrant and minority communities throughout the state contribute strongly to Virginia’s health and economic growth.

Yet these groups are also the ones most vulnerable to any increased restrictions on loans and credit. A bill under review in the U.S. Senate will weaken the credit card systems many entrepreneurs depend on to help start their businesses and run them efficiently.

The Credit Card Competition Act aims to completely restructure our financial system. This legislation is being promoted by big-box retail chains that would gleefully receive millions of dollars if approved. It will takeaway the power of credit unions and community banks to set security standards for their credit cards, leaving businesses exposed to higher levels of fraud.

The legislation will also drain revenue from the financial system, meaning that there will be fewer funds available for small businesses and personal loans. This will cause banks and credit unions to turn down loans to higher-risk individuals who may not have strong credit scores or cosigners. It will also make it harder to be approved for a credit card, which many businesses need for inventory purchases, supplies and other needs.

Hurting disadvantaged communities’ ability to get loans will directly impact our city and the entire state. It will make it more challenging to start or grow businesses, which in turn will mean fewer people hiring. It will also be harder for the average consumer to get approved for a mortgage, car loan or credit card. You can imagine the domino effect this will have on people who need a small loan for a new car or unexpected hardship. Families rich and poor also use credit card points to make their budget work — whether it’s for a vacation or much-needed summer clothes for their children.

This bill will also affect anyone who works in the travel industry and any cities that benefit from tourism. Richmond is a popular destination for many in the South and mid-Atlantic regions, whether it’s a day trip to visit Maymont Park or a long weekend for the Bluegrass Jam. But this legislation will nearly eliminate credit card rewards, and labor unions in the travel industry have warned they expect a decline in travel as a result. They are rightly troubled that this will impact many of their good-paying union jobs. The unions opposed to the bill include the Transport Workers Union of America and the International Association of Machinists and Aerospace Workers.

I hope our U.S. senators, Tim Kaine and Mark Warner, give this bill a good look and vote no if it moves to the Senate floor this year. This bill is an anti-union ploy that will hurt travel, small businesses and the diverse communities of our city, region and state. Any bill that is going to generate higher profits for big-box chains while hurting the average person’s access to credit is a bad idea, and the Senate needs to make sure this bill fades away.

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Taxpayers Will Pick Up the Credit Card Competition Act Tab

By: John McCuskey

West Virginia’s State Auditor

May 31, 2024

Credit cards have revolutionized payments, allowing for faster, more convenient transactions. Purchase cards are just like your credit card – but are tailor made for government use. Because of the numerous benefits purchase cards offer, they are the preferred payment method for state and local governments. The U.S. Government Accountability Office, Congress’s watchdog, has extensively studied the benefits purchase cards provide to government agencies, finding that they lower administrative costs, generate income from rebates, and help agencies manage payments.

In West Virginia, state and local purchasing cards are used by employees at our state agencies and nearly 400 local governments, boards, and commissions to purchase a wide variety of goods and services, amounting to nearly $695.4 million in transactions in fiscal year 2023. In West Virginia, our Purchase Card Program has generated between $27 million and $157.1 million in cost avoidance, representing very real savings to our taxpayers. While credit cards generate points and rewards for cardholders – state governments receive cash rebates for the large volume of goods and services we purchase. In fact, in the last seven years, over $69.5 million in rebates have been collected and dispersed to state and local governments in West Virginia. As a direct result of the savings and revenue generated by state and local employees using credit cards for government purchases, West Virginians are provided additional public services without needing to pay higher taxes. Moreover, by negating the need for state and local government employees to use cash, the program also reduces the likelihood of fraud and theft across government purchases — and makes it easier for our offices to ensure state funds are used appropriately and efficiently.

However, recently proposed legislation introduced by Senator Dick Durbin (D-Illinois) known as the Credit Card Competition Act, or CCCA, threatens the stability and security of credit card payments, as well as the benefits that West Virginians receive, directly and indirectly, from credit cards. The CCCA would take payment routing choice away from cardholders and would result in more transactions being processed by smaller, lesser- known networks — networks that are likely less secure and may have less regard for data privacy. It will also result in less revenue for credit card issuers, which means fewer rewards for West Virginian cardholders to offset the price of fuel, groceries, and travel. Importantly, it will reduce the rebates West Virginia receives through its Purchase Card Program — and, potentially, reductions in the state and local government services that are funded in part by these rebates, leaving our taxpayers picking up the tab, or doing with less.

While a lot has been said about this piece of legislation in search of a problem, it’s direct impact on state governments that utilize purchase cards, and taxpayers who will be ultimately picking up the tab, needs to be understood. Instead of helping hard-working West Virginians, the CCCA will do the opposite – all the while leaving our state transactions less secure. Congress shouldn’t waste any more time on it.