A proposed amendment introduced today would add language capping credit card interest rates at 10% to the GENIUS Act, an unrelated bill establishing a regulatory framework for payment stablecoins.
Sen. Josh Hawley (R-Mo.) proposed the amendment, which would add the text of his 10% Credit Card Interest Rate Cap Act to the GENIUS Act. Hawley and Sen. Bernie Sanders (I-Vt.) introduced the rate cap proposal as a standalone bill in March but so far it has failed to gain traction among lawmakers.
In a joint letter to Senate leaders, the American Bankers Association joined with other banking and credit union associations in denouncing the proposed amendment, which they said would harm the very people Hawley has said he is seeking to protect.
“Many consumers who currently rely on credit cards would be forced to turn elsewhere for short-term financing needs, including pawn shops, auto title lenders or worse – loan sharks, unregulated online lenders and the black market,” the associations said.
They added that a reduction in credit resulting from a cap would have negative ripple effects on not only consumers who rely on credit to help make ends meet, but the broader economy as a whole.
“Other research demonstrates that when consumers lose access to credit, they often reduce spending on essentials such as healthcare, education and food, and are more likely to fall behind on bill, mortgage and rent payments,” the associations said. “Lacking a credit card would also likely reduce their consumption of items like furniture and clothing which not only negatively affects consumers, but also negatively affects the broader economy.”
