Jefferson City News

WASHINGTON, D.C. – Today, Congressman Blaine Luetkemeyer (MO-3) engaged in a discussion regarding the implications of politicized financial regulation on consumer credit and community development. Speaking to witnesses from various organizations, including the Center for Monetary and Financial Alternative Cato Institute, Consumer Bankers Association, Commonwealth Credit Union, and Unidos US, Rep. Luetkemeyer expressed his concerns.

During the dialogue, Rep. Luetkemeyer raised a specific issue about the Federal Reserve Board's proposed Regulation II rulemaking and its potential effects on smaller financial institutions. He directed his question to Lindsey Johnson, President and CEO of the Consumer Bankers Association, asking about the impact of the proposed rulemaking on these institutions. Johnson responded by highlighting past outcomes, stating, “We’ve got 10 years’ worth of data now to go back to and say we know what happened. Last time the Federal Reserve reduced debit interchange by 40%, consumers saw their checking account access costs go up by about 30%.”

Rep. Luetkemeyer further emphasized the prevalence of studies supporting these concerns, to which Johnson added, “The Fed, the GAO, academics, and smaller institutions also felt that impact.” She pointed out that the reduction in revenue had a direct influence on the ability of institutions to provide free checking accounts.

In the exchange, Rep. Luetkemeyer expressed his skepticism towards regulators, suggesting a subtle pressure for compliance. He remarked, “Well, there's this wink and nod with the regulators. They wink, nod, and say, this is a good idea to comply with this because sooner or later it may come to where you have to. So that's the way they operate.”

The discussion led by Rep. Luetkemeyer sheds light on the potential consequences of financial regulations on consumer credit, particularly for smaller financial institutions. The concerns raised underline the importance of considering the broader impact on the financial landscape and the accessibility of essential services for consumers.