New U.S. legislation could upend credit card loyalty programs. The Points Guy founder calls the reckoning un-American

In today’s CEO Daily: Diane Brady reports on new threats to the loyalty economy.

The big leadership story: Why corporate accountability for the Epstein files is so hard to come by.

The markets: U.S. futures are trending lower after the holiday break.

Plus: All the news and watercooler chat from Fortune.

Good morning. Americans love their loyalty points. Almost three-quarters of them use a credit card that lets them earn rewards. And the income generated from issuing those points is critically important to many players in the Fortune 500, especially airlines, hotels, and merchants. Delta Air Lines alone reported a 6% increase in loyalty revenue last year, with co-brand income from Amex up 11% to $8.2 billion. 

U.S. companies are expected to issue or redeem about $26 billion in points for customers this year. That doesn’t include the hundreds of billions of dollars in uncashed points that keep people tethered to their loyalty programs, despite devaluations or perks that are hard to redeem. Along with generating revenue, those programs generate data that lets companies recognize and engage their most valuable customers. That might soon change.

Get ready for a raft of legislation that could cut points and consumers’ ability to accrue them. Lawmakers have reintroduced the Credit Card Competition Act, which forces issuers to put two unaffiliated networks on each card, allowing merchants to pick the cheaper one at the point of sale. And last week a federal judge upheld an Illinois state law, the Interchange Fee Prohibition Act, which bans swipe fees on taxes and tips, which could lead to higher card fees and reduced rewards. Other states are also targeting so-called interchange fees.

Although intended to lower fees for merchants and customers, this push threatens a form of currency that consumers like me really value. It also impacts the business models of airlines and other companies that rely on points. For a perspective from the front lines, I checked in with Brian Kelly, founder of The Points Guy. Along with building a travel and lifestyle platform that helps people navigate points, Kelly is a powerful advocate for improving the loyalty economy. 

“There is an existential crisis happening around the rewards and credit card space,” Kelly told me last week. “I don’t think enough people realize the ramifications of these laws.”

He’s right: If retailers can choose which network to use for transactions, they’ll naturally pick one with lower swipe fees than the 2-3.5% that credit cards often charge. For consumers, that could mean fewer points and possibly fewer of the fraud protections or other perks that those fees help sustain. The Illinois ban on fees for taxes and tips adds another layer of friction. 

These are complex laws that aim to achieve a multiplicity of goals. Kudos to New York for making it harder to devalue points without warning. But taking aim at fees also threatens the ecosystems they’ve created. Kelly even calls it un-American: “We’re going to allow a retailer to decide how a customer pays for a purchase with their own money? If retailers want people to use their debit card, then they should incentivize it.” And companies that want to retain the loyalty of their best customers may need to get more creative than relying on credit-card spending to boost their coffers.Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Corporate accountability for the Epstein files

Many business leaders were named in the latest round of Epstein files, and some have since lost their jobs or leadership posts. But the sheer number of people implicated, the varying degrees of association with Epstein, and other complicating factors have made repercussions for others slower to emerge.

IBM triples-down on entry-level hiring

IBM CHRO Nickle LaMoreaux said last week that the company is “tripling our entry-level hiring,” particularly for jobs that are expected to be displaced by AI. The company has accounted for AI fluency in the duties assigned to new hires but asserts that employers that “doubled down on entry-level hiring in this environment” will be the most successful in the future.

Checking in with Forgent post-IPO

Forgent Power Solutions went public earlier this month, less than a year after the electrical distribution equipment company came together as a merger between four legacy firms. With the need for the company’s equipment surging as AI projects demand energy, CEO Gary Niederpruem told Fortune that he jokes the company is “bringing sexy back in the electrical distribution space.”

S&P 500 futures were down 0.15% this morning. The last session on Friday closed up 0.05%. STOXX Europe 600 was up 0.24% in early trading. The U.K.’s FTSE 100 was up 0.45% in early trading. Japan’s Nikkei 225 was down 0.42%. Chinese markets are closed for the New Year, as are South Korean markets. India’s NIFTY 50 was up 0.14%. Bitcoin was at $68K.

Around the watercooler

Lowe’s CEO used to make $4.35 an hour working at Target. His secret to climbing the corporate ladder was volunteering for jobs ‘nobody else wanted’ by Sydney Lake

Cisco CEO says all people who are wildly successful in tech share 3 traits by Preston Fore

How 100‑year‑old Caterpillar went from making construction equipment to becoming an AI market darling by Sheryl Estrada

Brian Moynihan isn’t so worried about an AI jobs bloodbath, pointing to a 1960s theory that computers would end all management roles by Eleanor Pringle

U.S. literally can’t afford to lose superpower status as debt looms—so we’re stuck in an ‘increasingly loveless’ marriage with Europe, analyst says by Jason Ma

CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.

Diane Brady writes about the issues and leaders impacting the global business landscape. In addition to writing Fortune’s CEO Daily newsletter, she co-hosts the Leadership Next podcast, interviews newsmakers on stage at events worldwide and oversees the Fortune CEO Initiative. She previously worked at Forbes, McKinsey, Bloomberg Businessweek, the Wall Street Journal, and Maclean's. Her book Fraternity was named one of Amazon’s best books of 2012, and she also co-wrote Connecting the Dots with former Cisco CEO John Chambers.

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