Image Credit: Nicolas Raymond / CC
By Katherine Anderson –
It’s no secret that Tennessee is the home to two of the staunchest China hawks in the Senate. At the end of last year, Sen. Marsha Blackburn (R-TN) called on the Biden Administration to blacklist five Chinese companies that have played a role in human rights violations against the Uyghurs. That followed a series of amendments that she introduced earlier in the year, including one that would ensure competitiveness of American businesses in China.
Sen. Bill Hagerty (R-TN) has repeatedly delivered tough rhetoric on China and has rejected calls for the Biden Administration to weaken policies that had been put in place during the Trump Administration. Our Senators have proven to be steady, reliable leaders on foreign policy issues related to China.
Unfortunately, some Democrats and progressives in Congress are pursuing proposed policies that could strengthen China’s economic standing and threaten America’s financial security. Sen. Dick Durbin (D-IL) is pushing for new regulations on credit cards that could open the door and allow China to gain access to Americans’ financial transaction data.
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Twelve years ago, as part of the massive Dodd-Frank banking bill, Durbin successfully offered an amendment that mandated price controls and routing restrictions on debit cards. Those changes required merchants to link with at least two unaffiliated network providers. One such provider, which now processes debit transactions in the United States, is China UnionPay, the world’s largest card network.
Expanding those regulations from debit to credit would likely be a boon for UnionPay and the Chinese government. There are well documented concerns related to data security and privacy with Chinese companies that have close ties to the government, like UnionPay. If UnionPay is allowed to process credit transactions, it could put Americans at risk of unwittingly allowing the Chinese government to access private financial data.
Beyond the national security concerns, a policy of federally-mandated price controls and regulations on credit transactions would harm consumers and is just a bad idea. Access to credit cards without annual fees would greatly diminish and millions of Americans could lose access to credit. Rewards programs are worth about $50 billion a year to consumers, and that would be put at risk as well. Aside from UnionPay, the only real winners here would be massive retailers like Amazon and Walmart.
Price controls just don’t work. The Dodd-Frank regulations on debit cards failed to lower prices for consumers. According to a study out of Boston University, low-income consumers lost $160 a year due to a loss of benefits. It left a million Americans without a checking account when banks were forced to end free checking accounts. Another study, from the Federal Reserve, found that the availability of free checking accounts declined by 35 percent at banks that were directly targeted by the Durbin Amendment.
This set of policies would be a disaster for Tennessee and for the American people. The most concerning element is the potential national security risk that would come from exposing Americans’ financial data to the Chinese government. We need continued leadership from Blackburn and Hagerty on the issue to protect consumers and their financial data.
Katherine Anderson is a resident of Campbell County, TN and the owner of JD Anderson Contracting, LLC.
