Statement by Mike Stenhouse, CEO for the RI Center for Freedom & Prosperity in response to the Biden administration’s March 5 rule to impose a credit card “late fee” regulation that will harm consumers:

“In struggling to come up with some issue that might appeal to voters during his State Of The Union address Thursday evening, the Biden Administration once again will try to deceive Americans. In his attempt to shift blame away from his failed Bidenomics policies, Biden will attack corporate America, namely credit card companies and their so-called “junk fees”.

This week, Biden’s Consumer Financial Protection Bureau released a new rule  that would place a government-imposed cap on credit card “late fees” of $8, down from an average of $32.

The president believes his “war on junk fees” can be a populist reelection campaign issue, but this rule itself is nothing more than political junk – a mindless play to fool voters – that will harm consumers in the end.

This rule is one of many futile attempts by Biden to blame corporate America for the historically high inflation that has burdened Rhode Islanders and all Americans; inflation that has forced many families to increase their credit card balances to unhealthy levels.

With regard to regulating credit card late fees, the Federal Reserve tried to control them in 2010; and the unintended consequences were predictable and severe, with consumers getting the short end of the stick, as they will again this year if this rule is allowed to stand.

Like all corporations, credit card companies must earn profits in order stay in business. If caps are placed on late fees, these institutions will be forced adjust other fees and rates; consumers will likely be charged higher fees for ATM transactions and for checking accounts, and might even see their popular credit card reward programs scaled back … or even eliminated.

The price controls in the CPFB’s new credit card rule will certainly lead to fee increases, more limited credit access, and will force customers with good credit to subsidize the banking experiences of everyone else.

It has been reported that “shrinkflation” will similarly be a focus of Biden’s address to the nation. Bidenomics has led to Bidenflation, which has led to Shrinkflation: so, instead of raising retail prices due to the staggering inflationary rise in material costs, many manufacturers are ‘shrinking’ the amount of product in each package. The Biden administration does not seem to understand basic economics … that government-created inflation is the root cause of shrinkflation, not corporate greed, as the President will surely try to make the case. With the same bogus reasoning, Biden has also blamed “big oil” corporations for the rapid rise in gasoline prices.

In a competitive free-market economy, if a credit card company charges too high a rate or imposes fees that are unreasonably high, consumers can simply choose to do business with another provider, with no adverse impact to others. Biden’s attempt to “socialize” the credit card industry, in part, will backfire and heap even more burdens upon America’s economy.

The CFPB’s proposed rule should be repealed. Rhode Island’s Congressional delegation should not be fooled by the false appearance of a customer-friendly rule, and they should work with Democrats and Republicans alike to make every effort to reverse it … and to protect the larger consumer base.”