Pelican State News

A spokesperson for the Louisiana Credit Union Association (LCUA) said an analysis released earlier this month shows that proposed federal credit card regulations backed by U.S. Sen. Josh Hawley (R-Mo.) would be "bad policy" for the state's banks and consumers.

The analysis, released Jan. 8 by the Electronic Payments Coalition (EPC) and Oxford Economics Research (OER), that showed the so-called Credit Card Competition Act could lead to a loss of $227 billion in U.S. economic activity and 156,000 job losses.

”The Louisiana Credit Union Association powered by Luminate is alarmed by the findings of this study,” Anthony Ware II, director of legislative advocacy for LCUA, told Pelican State News. “These stark figures reinforce our longstanding concerns about the unintended consequences of this legislation.”

“This bill threatens to disrupt the financial ecosystem that supports Louisiana’s communities,” said Ware. “By targeting the interchange system that supports fraud prevention and transaction security, this bill puts consumers, small businesses, and community financial institutions in Louisiana at risk.”

Originally sponsored by U.S. Sens. Richard Durbin (D-Ill.) and Roger Marshall (R-Kans.) in 2023, the legislation would require banks to offer merchants at least two network options, one of which cannot be Visa or Mastercard, for processing credit card transactions. Opponents to the bill argue that if given the choice, retailers would likely choose cheaper, less secure networks for processing transactions, thereby exposing consumers to increased securities and fraud risks.  

“Louisiana's credit unions and community banks would face significant financial strain under this legislation,” said ware. “Reduced interchange fees, which fund essential services like fraud protection and transaction security, would force smaller institutions to cut back on services, increase fees, or limit access to affordable credit.”

The legislation has not, as yet, been re-introduced in the current Congress.

The bill could result in a $227 billion loss in economic output over approximately four years, driven by a 100 basis point reduction in interchange and an $80 billion decline in discretionary spending, according to the OER study, with regions reliant on travel and recreation spending projected to experience the greatest economic impact from the proposed policy.

OER is a global advisory firm that provides economic forecasting and analysis. The company was founded in 1981 as a commercial venture with Oxford University’s business college. It offers research on economic trends, policy, and industry performance for governments, businesses, and financial institutions. The firm operates offices in various regions, including North America, Europe, and Asia. Oxford Economics produces reports and data covering global and regional economies, industries, and markets.

The EPC is a trade association that represents credit unions, community banks, and payment card networks. The coalition advocates for policies that protect and promote the use of electronic payments. 

Founded in 1934, LCUA serves as the trade association for credit unions in Louisiana. It provides advocacy, compliance support, and educational resources to its member credit unions. The organization works with state and federal policymakers to address issues impacting credit unions and their members. Its headquarters are located in Harahan, Louisiana, and its membership includes credit unions of various sizes operating throughout the state.