News: GOP looks to junk Chopra’s credit card rule

Tuesday, June 13, 2023

GOP looks to junk Chopra’s credit card rule

Jun 13, 2023

Presented by the Consumer Credit Card Protection Coalition

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Programming Note: We’ll be off this Monday for Juneteenth but will be back in your inboxes on Tuesday.

Congressional Republicans are making use of their whetstones in preparation for CFPB Director Rohit Chopra’s trip to Capitol Hill this week.

Big businesses and the banking lobbyists have been on the warpath against the divisive consumer finance watchdog for months claiming he exceeded his authority in a high-profile bid to cap credit card late fees at just $8.

That campaign accelerated in advance of this week’s hearings as groups like the Consumer Bankers Association and U.S. Chamber of Commerce issued a flurry of press releases and policy briefs deriding the proposal — which President Joe Biden made a cornerstone of his bid to crack down on so-called “junk fees.”

“We've had a lot of conversations again on both sides of the aisle. We've done briefings. We've made sure that folks understand the impact,” CBA President and CEO Lindsey Johnson told MM on Monday. “It's a very politicized junk fee campaign that the CFPB has moved along here.”

Johnson’s arguments appear to have landed with Republican lawmakers, including Senate Banking’s Ranking GOP Sen. Tim Scott, who later this morning will spar with Chopra over how the rule could limit consumer access to credit products at small banks and credit unions.

The South Carolina senator and 2024 presidential candidate will also probe the bureau’s analysis of potential savings for consumers — the CBA has been circulating a Washington Post column that questioned the math behind a $9 billion figure Chopra’s cited — as well as his contention that the rule doesn’t require the input of a small business panel. Notably, Rep. Rashida Tlaib (D-Mich.) — one of the most vocal progressives on Financial Services — has also questioned how the rule could hit smaller institutions.

CFPB officials say Chopra plans to parry critiques by casting the proposal as a way to close a regulatory loophole that allowed banks to exploit issuers for more than $12 billion annually. While some groups — including the Chamber — have claimed the proposal is illegal, CFPB staff are still weighing public comments.

Meanwhile, the director’s defenders have derided the banking sector’s criticism of the rule as being overblown. The industry made similar claims about deteriorating consumer credit options during the fight over the 2009 law that created the fee caps.

“None of that scary stuff — reduced access to credit — panned out,” said Carter Dougherty, a spokesperson for the progressive group Americans for Financial Reform, citing research from economists Sumit Agarwal, Neale Mahoney — now on the White House’s economic team — the OCC’s Souphala Chomsisengphet and NYU’s Johannes Stroebel.

And Chopra will have allies on the panel as well: In his prepared remarks, Senate Banking Chair Sherrod Brown (D-Ohio) says that “most Americans don’t have high-priced lawyers. They don’t have corporate lobbyists. But they have the CFPB – and it’s our job to make sure the CFPB will be their voice for decades to come.”

IT’S TUESDAY — Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com.

A message from the Consumer Credit Card Protection Coalition:

Defunding data security for credit cards and ripping away hard-earned rewards from working families would be a disaster for consumers, but that’s exactly what the Durbin-Marshall credit card bill would do. Thousands of Americans are mobilizing to demand Washington stay out of their wallets by stopping the Durbin-Marshall credit card bill. Learn more by clicking here.

Driving the Day

The Consumer Price Index for May will be released at 8:30 a.m. … Treasury Secretary Janet Yellen will testify at House Financial Services at 10 a.m. … Chopra testifies at Senate Banking at 10 a.m. … House Financial Services holds a digital assets hearing at 2 p.m.

Is it getting cooler? — Bloomberg’s Matthew Boesler: “Federal Reserve officials seeking to put their tightening campaign on pause this week are set to receive support from consumer price index data due Tuesday, according to Bloomberg Economics … Excluding food and energy, prices probably rose 0.3% — a deceleration from April’s 0.4% increase.”

— The WSJ’s Sam Goldfarb: “S&P 500 Closes at Its Highest in Over a Year”

The long tail of the debt ceiling fight — From Sam: “Fitch says it isn't convinced that policymakers can set the nation’s finances on a sustainable path because of the polarization roiling U.S. politics, suggesting that a downgrade on Treasury securities could be on the way — the second in U.S. history.

‘It's not just the debt limit,’ James McCormack, Fitch Ratings’ managing director and global head of sovereign and supranational ratings, said in an interview. ‘What we've seen in the United States is a steady deterioration in governance.’”

Adeyemo to mark oil price cap-iversary — Zach reports that Deputy Treasury Secretary Wally Adeyemo on Thursday will mark the six-month anniversary of the Russia oil price cap with a speech on how it's going and where it's headed as Ukraine ramps up a summer counteroffensive. A Treasury official said that in remarks and a fireside chat at the Center for a New American Security, Adeyemo is expected to note that Russia is taking steps to alter its tax policy — seen as institutionalizing the price discount it's been forced to endure — and build out seaborne oil service providers in an effort that will draw funding way from the war.

Epstein — The WSJ’s Khadeeja Safdar and David Benoit: “JPMorgan Chase agreed to pay $290 million to settle a lawsuit over its ties to Jeffrey Epstein, people familiar with the matter said, shortly after top executives were questioned about the bank’s years of dealings with the convicted sex offender.”

Short punt — Our Eleanor Mueller: “The Senate Banking Committee does not plan to vote this week on legislation that would penalize executives at failed banks, as lawmakers take more time to discuss the plan.”

A message from the Consumer Credit Card Protection Coalition:

Regulatory Corner

Activision — Bloomberg’s Leah Nylen and Anna Edgerton: “The Federal Trade Commission sued Microsoft Corp. in federal court Monday to block the company from closing its $69 billion acquisition of Activision Blizzard Inc.”

OMB — Our Brian Faler: “The White House budget office will no longer review major tax regulations under a new agreement within the Biden administration, a move Treasury Department veterans say should speed up the regulatory process.”

GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGISTER HERE.

Jobs Report

First in MM: Top Gensler aide goes Public — Prashant Yerramalli, SEC Chair Gary Gensler’s former chief of staff, has joined the online brokerage Public as its vice president of operations and regulatory affairs. Yerramalli says he’ll help the online brokerage in “navigating those shoals” as it develops retail products for investments in high-end sneakers and crypto as well as traditional stocks and Treasury securities.

According to Yerramalli, one reason he made the move to Public after taking a few months off to relocate to New York was the platform’s policy of not taking payment for order flow — which refers to when retail brokers rely on trading firms to execute their clients’ orders. Gensler sought to overhaul the practice after the meme stock boom. “I thought [Public’s] values align with a lot of my values,” he told MM, adding that it “reflected a desire to align their incentives on their interests with their customers and their clients.”

— Another top SEC official, Juan Migone, has also made the jump to the private sector. Migone, a former chief accountant in the agency’s enforcement division, has joined the global advisory firm StoneTurn as a partner.

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

In the markets

Hospitality — Bloomberg’s Chris Dolmetsch: “New York City agreed to delay until September enforcement of a new municipal law requiring hosts of short-term rentals to register for an operating license.”

— WSJ’s Kate King: “San Francisco’s once thriving hotel market is suffering its worst stretch in at least 15 years, pummeled by the same forces that have emptied out the city’s office towers and closed many retail stores … a growing number of San Francisco hoteliers are signaling they may be ready to give up.”

A message from the Consumer Credit Card Protection Coalition:

Millions of Americans rely on their credit card points and cash back rewards to pay for gas, groceries, travel and more. But the Durbin-Marshall credit card bill would steal the rewards that millions of Americans have earned, all to pay for a bailout for multibillion dollar retailer special interests. Worse yet, the Durbin-Marshall credit card bill would defund data security for credit cards, making it easier for cyber criminals to steal the personal and financial data of millions of Americans. Congress should protect American families, not find new ways to put Washington into the wallets of millions of consumers. Learn more about the disastrous Durbin-Marshall bill by clicking here.