The Independent Bankers Association of America has sent a letter to Attorney General Janet Reno supporting Visa U.S.A. in a current Justice Department antitrust investigation.
The investigation is reportedly nearing a conclusion, and Visa could end up being sued over a rule that prevents its member banks from issuing competing card brands like American Express.
The community banking trade group said in its letter, dated Tuesday and signed by executive vice president Kenneth A. Guenther, that the Visa bylaw "is essential to preserving the competitiveness of smaller banks in the marketplace for bank card products."
American Express Co., which has been stymied by Visa and MasterCard rules in its attempt to enter into co-marketing deals with U.S. banks, is seen as particularly interested in working with smaller banks like those in the IBAA.
"We have said all along that we don't expect the largest banks to be interested in our offer," said American Express spokeswoman Gail Wasserman.
Mr. Guenther said in an interview Wednesday that his 2,500 card-issuing members strongly support the sentiments in the letter, which was also distributed to members of the House and Senate banking committees.
Mr. Guenther wrote that if Visa let its members issue American Express cards, larger banks would be able to strike better deals with American Express than smaller institutions.
"A small bank, while potentially being able to carry both Amex- and Visa-branded card products, could be faced with the prospect of competing with a far larger bank that had received much more profitable terms for itself on Amex-branded cards," said the letter.
"We urge the Justice Department not to join in Amex's assault" on Visa's rule, said the letter.
"Clearly, we disagree with the view expressed by the IBAA," said Ms. Wasserman.
MasterCard has a similar policy and is also being investigated by the Justice Department, but the IBAA said it had addressed the Visa rule specifically because more of its card-issuing members offer Visa than MasterCard.