Durbin Amendment

Durbin Amendment



Nearly $32 billion now lines the pockets of retailers because of the Durbin Amendment. Retailers promised to pass these “savings” on to consumers in the form of lower prices on goods but six years later customers have yet to benefit. Now they are back asking for another handout. Make sure to get the facts below.

On May 10, 2010, Senator Dick Durbin (D-IL) introduced an amendment to  S. 3217 (which would ultimately become the Dodd-Frank Act), an amendment written by giant retailers, for giant retailers, that wanted Congress to help them improve profits by setting price controls on debit card acceptance fees.

Only three days later – with no hearings, studies, or in-depth analysis of the impact of the amendment on consumers, small businesses, community banks or credit unions – the Senate voted in favor of the amendment.  In an effort to secure needed votes from skeptical Senators, Senator Durbin hand-wrote edits in the margins that sought to “carve out” exemptions for smaller financial institutions.  Immediately following the vote, community banks and credit unions objected, saying the carve out would not work.

Despite objections by a bipartisan group of 131 House members expressing “grave concerns” about the Durbin amendment. President Obama signed Dodd-Frank into law in July 2010.  The original House version of Dodd-Frank included no such price cap on interchange fees, so the House did not have the opportunity to review, debate, or vote on the Durbin amendment.  After a conference committee to resolve differences between the House and Senate versions, the Durbin amendment remained, along with a new provision relating to the routing of transactions – a provision not considered by either the full House or full Senate.

The Durbin amendment’s price controls went into effect on October 1, 2011.  To date, there is no evidence that retailers are passing along savings to their customers.

Added in the Dark of Night

Associations representing credit unions and community banks came together to speak out about the harmful impact of the Durbin Amendment. Take a look at the piece by Jim Nussle of the Credit Union National Association, Camden R. Fine of the Independent Community Bankers of America, and B. Dan Berger of the National Association of Federal Credit Unions to learn about the real toll of Durbin.