Lays Out Two Changes To National Banking Act That Would Upend National Banking Act, Inflict Enormous Consumer Cost, Take The Nation Backward To Civil War Patchwork Era Of Banking
FOR IMMEDIATE RELEASE:
September 27, 2024
DES MOINES, IA ––The Center for Legal Action (CLA) for the American Free Enterprise Chamber of Commerce (AmFree) today filed an amicus brief in the ongoing lawsuit against the Illinois Interchange Fee Prohibition Act (IFPA). Labelling the IFPA an “economic threat,” CLA’s brief details the “devastating damage” posed to the debit and credit payment system in the United States – a key facilitator for trillions of dollars in transactions driving the economy every year – and the ensuing consumer harm in the form of increased costs and higher fees.
The brief lays out two specific ways the IFPA would upend the principles of the National Bank Act of 1863 (NBA), passed during the Civil War to inject uniformity and stability to a fragmented banking system consisting of disparate state laws.
“Left unchecked, the IFPA would not only inflict untold consumer harm in the form of increased fees, but also take the nation backwards to a Civil War era patchwork banking system marked by instability and confusion,” said Machalagh Carr, Director of AmFree’s Center for Legal Action.“For more than a century and a half, the nation has benefited from the National Bank Act and its ensuing uniformity and stability. Now politicians in the land of Lincoln are seeking to unwind this progress and damage banks, their customers, and the economy in the process.”
Read CLA’s amicus brief here.
First, the IFPA upends Congress’s vision of a system of federally chartered banks that can operate across state lines without the burden of inconsistent state regulations that significantly interfere with their operations. This goal was expressly restated when Congress codified preemption of conflicting state laws in passing the 2010 Dodd-Frank Act.
Second, the disruption caused by the IFPA would be substantial. To comply with the Act, banks and card networks would be forced to retool their credit and debit card systems at enormous cost, if they are able to fully comply with the requirements at all. Consumers would be harmed, as these increased costs would ultimately be passed on in the form of higher fees. The benefits consumers and merchants receive from existing anti-fraud systems would be placed at significant risk, because the transaction data that is used to combat fraud could no longer be used for that purpose.
Filed in August 2024 in the U.S. District Court for the Northern District Of Illinois by the Illinois Bankers Association, American Bankers Association, America’s Credit Unions, and Illinois Credit Union League, the lawsuit accuses Illinois of interfering with the federal government’s exclusive regulatory authority over financial institutions. Signed by Governor JB Pritzker in June 2024, the IFPA is scheduled to take effect in July 2025.
AmFree is a trade organization representing American businesses of all sizes. It is dedicated to advancing the principles of free enterprise, free markets, limited government, and American leadership globally. AmFree Chamber is chaired by the Honorable Terry E. Branstad, who previously served as Ambassador to China and was the longest serving Governor in American history.
AmFree Chamber’s Center for Legal Action focuses on combatting administrative overregulation both through agency proceedings and in litigation and is chaired by two-time former U.S. Attorney General William P. Barr.
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