In Washington, it's rare to see Republicans and Democrats find common ground. So when it happens, you'd think it'd be something worth cheering.
But sometimes, bipartisanship just means bad ideas have found more backers. The so-called "Credit Card Competition Act" is a prime example.
Despite its test-marketed name, this bill creates the opposite of competition. It's a prime example of government regulation pushed by big corporations at the expense of smaller community-based competitors. Put simply, when a former member of the House Freedom Caucus agrees with Democratic Sen. Mark Warner, we can be sure it's bad policy.
At its core, the Credit Card Competition Act would require banks and credit unions to offer merchants a choice of at least two unaffiliated payment networks to process credit card transactions. Sounds harmless, right? But in practice, this mandate undermines the very infrastructure that keeps our financial system secure. It injects government into private business agreements and strips banks and credit unions of the ability to protect their customers from fraud, privacy breaches and service disruption.
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The government regulatory intervention to require "competition" is a push by large retailers and national banks to make it so expensive to do business that smaller and more localized competitors fall by the wayside. Essentially, under the rubric of competition, the largest retailers and banking institutions can eliminate their smaller competitors. Only in Washington, D.C., right?
The most damaging effects would hit community banks and credit unions -- institutions that don't have the resources of Wall Street giants but do have deep roots in the communities they serve. These local lenders are the backbone of small-town America, and they depend on interchange fees to offer credit cards and other basic financial services. Strip that revenue away, and you strip away their ability to serve working families, small business owners and, most notably, our service members.
Nowhere would the impact be more personal -- or more harmful -- than at credit unions like Navy Federal.
As a veteran myself, I know the essential role that Navy Federal plays for our military community. They take a chance on young men and women who have never owned a credit card, bought a car or rented an apartment. They provide loans to 19-year-old sailors and marines with no credit history and help young airmen build financial futures that are stable and secure. They understand the unique challenges of military life, and they go the extra mile -- because they aren't beholden to shareholders. They're accountable to their members.
The Credit Card Competition Act puts all of that at risk. It would mean less revenue for credit unions, less flexibility to serve their members and potentially fewer options for the very people who need them the most -- junior enlisted troops who can't walk into a Wall Street bank and ask for a favor.
And let's not pretend this is about lowering prices for consumers. Retail giants have already benefited from billions in swipe fee reductions over the years, and studies have shown that these savings rarely -- if ever -- get passed on to customers. Instead, they pad corporate profits while banks and credit unions are left holding the bag.
This is crony capitalism disguised as reform. It hands more power to megastores like Amazon and Walmart while punishing the institutions that know your name when you walk in the door. And worse, it opens the door to Chinese-owned payment networks and other high-risk processors that raise serious national security questions -- especially as global cyber threats continue to grow.
Republicans are supposed to stand for free markets, limited government and individual liberty. The Credit Card Competition Act violates all three principles. It's a misguided attempt at micromanaging a complex and competitive industry that's already working -- and working well -- for the American people.
Let's call this bill what it is: a solution in search of a problem, written by and for the retail lobby. We don't need Congress to pick winners and losers in the payments system. We need Congress to get out of the way and let free markets work.
If Republicans and Democrats want to come together on something real, let it be protecting the institutions that serve everyday Americans, including those who wear the uniform. Let's not destroy the village in the name of saving it.
Between 2017-2019, tom Garrett served in the u.S. House of representatives serving the 5th Congressional district. He currently serves the 56th district of the Virginia House of delegates. Contact Garrett at tomgarrettlawfirm@gmail.com.
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