MIBA LOBBYING Report Andy Arnold Arnold & Associates It is a pleasure working with the staff of MIBA and representing MIBA with members of the legislature, their staff and the executive branch. As we begin to shift our focus to 2024, it is important to take a look back at what was accomplished in 2023. MIBA was instrumental in passing: • SB 13 — Relating the powers of the division of finance • SB 63 — The SAFE Banking of Marijuana Act • SB 101 — Provisions relating to lender-placed insurance • SB 186 — Enhanced penalties for property damage to teller machines • SB 398 — The collection of motor vehicle sales tax by a dealer In the run-up to 2024, we recognize several new and unique political challenges: • Term limits will bar six state senators and 22 state representatives from seeking re-election. • At present, five of the six-term-limited state senators are running for statewide office. • There are at least six contested republican primaries, two of which are against sitting republican senators. • The current Speaker of the House is under fire to resign for admitting that he was personally reimbursed by the state for expenses incurred by his campaign committee. These are just the political challenges that we predict will impact the 2024 session, which reminds me of the old Chinese curse, “May he live in interesting times.” ■ While some of the mechanics and messaging have changed, this bill would still lead to cutting services and benefits without achieving savings for consumers. In fact, this time around, the consequences would be even more devastating for customers. What proponents of the Credit Card Competition Act apparently do not understand is that services cost money. When you eliminate the ability to pay for a service, you eliminate the service itself. Interchange is no different. Reports about credit card rewards disappearing are true — an account would not earn or obtain points if the charge doesn’t occur on the point provider’s network — but the loss of fraud protection would be devastating to small retailers and consumers. As everyone reading this knows far too well, when a large retailer experiences a data breach, banks must reissue thousands of credit cards and reimburse hundreds of thousands, if not millions, of dollars in fraudulent charges to consumers. Thanks to interchange fees, financial institutions, not the merchant exposed to the attack, cover those costs. I can only imagine the reaction of consumers if they were to learn their coverage no longer existed, and they would have to simply accept their money has been stolen or sue the merchant and fight it out in court. It’s the reality consumers would be facing under this proposed bill. Small retailers would face a similar dilemma. While the Walmarts of the world could afford to take on some liability — make no mistake, they have no intention of doing so — the quick shop on the corner cannot. Instead of a minimal charge to use credit card services, they would be forced to buy additional insurance to protect against data breaches and fraud or face bankruptcy when things go wrong. Particularly in small communities, the added expense could spell disaster for the local economy. Some have suggested card issuers and banks should simply continue covering losses out of the goodness of their hearts. Serious people understand that is fantasy. Not only would it be a breach of a bank’s fiduciary duty to its customers and shareholders, but banking regulators would also quickly step in (rightfully so) for safety and soundness reasons. Again, services cost money and cannot exist without the ability to pay for them. I am not naïve to the reality of political posturing when it comes to banking policies. Again, financial institutions have long been an advantageous target for progressives. There are public supporters of the Credit Card Competition Act and other disingenuous bills aimed at the financial services sector who know the economic damage their bills would cause — particularly to low-income families. They’re content to let those of us who take these issues seriously protect them from themselves while they falsely claim to be the champion of the people their policies would hurt the most. But not everyone falls into that category. Plenty of legislators believe this is the right thing to do. Part of my job as a senior member of the Financial Services Committee is to help my colleagues on and off the committee understand issues with which they’re not familiar — just as I lean on my colleagues with expertise in other fields to help shape our conference’s policy agenda. Ultimately, we all answer to our constituents, and I am grateful for the consumers and community banks who have expressed the concern we share with this misguided legislation. ■ The Show-Me Banker Magazine | 11
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