With Democrats now leading both houses of Congress, credit cards look like the one corner of consumer credit where new federal law is plausible. Elsewhere, expect gridlock: Democrats lack 60 Senate votes, and the president has promised vetoes. The new Congress sits January 3 (some races remain uncalled).

Two card bills, different odds

The Credit Card Competition Act (better odds). It would require issuers with over $100 billion in assets to enable a second, unaffiliated network on each card, so merchants can route to the cheaper one. It doesn't cap interchange directly. It's bipartisan (Senators Durbin and Marshall), and the president endorsed it in January, calling swipe fees an "out of control ripoff." Likely vehicle: a must-pass bill, possibly in the lame duck. Obstacles: bank and network opposition over rewards and credit access, and the January retirement of Senator Durbin, its longtime champion. CCM noted in October that the election had put the bill on the clock.

A rate cap (harder). The president called in January for a one-year, 10% cap, and Senators Sanders and Hawley introduced a 10% bill in 2025. Neither moved under a Republican Congress. A cap still needs 60 Senate votes. Supporters say it would ease costs for households carrying balances; critics say lenders would cut credit to riskier borrowers. A higher or temporary cap seems more plausible than a flat 10%.

What it would mean for card ABS

For credit card securitizations, the two bills work through the same line: portfolio yield, and the excess spread it produces after investor coupons, servicing and charge-offs.

Exhibit 1

A rate cap hits yield directly. Finance charges are the largest part of trust yield. A cap well below current card rates could squeeze excess spread hard, and sustained negative excess spread is a standard early amortization trigger in master trusts. How a cap treats existing balances (grandfathered or not) would matter as much as the level.

The Credit Card Competition Act works more slowly. Many bank master trusts count interchange in their yield, and the Visa/Mastercard settlement, which would cap interchange on standard consumer cards at 1.25%, would already trim it. The settlement won preliminary approval in June, faces a final approval hearing on November 16, and merchant objectors may appeal. If merchants also route to cheaper networks, that income falls further, gradually. Cards issued on the issuer's own network, such as American Express and Discover, are exempt.

Issuers have levers. They could add or raise annual fees, cut rewards, or, in trusts that allow it, designate receivables as discount option receivables to support yield.

Underwriting would likely tighten. Issuers facing lower yields would likely pull back from subprime borrowers. That could slow receivables growth while improving the credit quality of what remains in the trusts.

The net credit effect for trusts: lower yield and thinner excess spread, partly offset by stronger collateral if underwriting tightens. A bill's terms (the level, the timing, and whether existing balances are grandfathered) will decide which dominates.

Elsewhere: oversight, not new law

Outside cards, the new Congress is more likely to hold hearings than pass laws. Federal agencies remain under the president's appointees.

CFPB. A House bill to move the bureau to annual appropriations and narrow its enforcement powers (H.R. 10184) cleared committee in September but is unlikely to advance. Expect hearings on dropped enforcement cases rather than a rebuilt bureau.

Collections, medical debt and credit reporting. The rules on the books won't change. What will is the pressure: expect hearings, letters to regulators and requests for watchdog reviews, pushing the CFPB to resume supervision and enforcement and putting companies' practices on the public record.

Crypto and stablecoins. Market-structure legislation (the CLARITY Act) stalled in the Senate in September, as CCM's preview of the vote suggested it might. Its fate, including the fight over stablecoin rewards, now rests with Democratic leaders. Implementation of the GENIUS Act, which takes effect in January, will likely draw closer scrutiny.

The states. With federal enforcement lighter, state attorneys general and legislatures have been moving on collections rules that go beyond federal minimums. That trend likely continues, and for many lenders it may matter more than Congress. Collections attorney John Bedard made this case on CCM podcast episode 24.

What to watch

November 16. The final approval hearing on the Visa/Mastercard interchange settlement.

The lame-duck session. Whether the Credit Card Competition Act's sponsors try again on a must-pass bill before January 3.

Committee leadership. Who chairs Senate Banking and House Financial Services. Senator Warren, the ranking Democrat on Senate Banking, could become chair; observers expect consumer protection, including card rates and fees, to rank high on her agenda.

Early bills. Whether a rate cap is reintroduced, at what level, and with which Republican cosponsors.

Issuer signals. Any moves on rewards, annual fees or underwriting ahead of legislation.

CCM read: Divided government usually means little new law, and most of consumer credit should expect exactly that. Credit cards are the exception worth watching, because both parties have reasons to act and the president is already on record. For card ABS investors, the question isn't whether a bill passes this year but what its terms would do to trust yield, and how much cushion today's excess spread provides.