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Op-Ed: Fed finds (again!) that Durbin Amendment hurts consumers
The Federal Reserve Board of Governors recently released a report called “The Impact of Price Controls in Two-sided Markets: Evidence from US Debit Card Interchange Fee Regulation.” That dense title is one that few consumers—or even policy wonks—will put on their August reading lists. They should. It proves, yet again, that lawmakers like House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Reps. Blaine Luetkemeyer (R-Mo.), and Ted Budd (R-N.C.) and others were right: the Durbin amendment, shoved into the 2010 Dodd-Frank bill at the last minute by politicians doing the bidding of merchants like Walmart, is the reason that American consumers are paying more to bank. Continue Reading
Op-Ed: Markup Of CHOICE Act Proves The Retailers Have No Clothes
In the Hans Christian Andersen tale the Emperor Has No Clothes, a king is convinced by two scam artists that they can weave him a suit that can only be seen by the best and brightest in the land. As the Emperor parades around naked, his subjects are fearful to comment because they don’t want to be viewed as stupid. It finally takes a child to blurt out what is clear to everyone – that indeed the emperor was wearing nothing at all. This story is reminiscent of the fairy tale retailers have been telling for the past seven years – trying to convince Congress that price controls on debit card interchange fees are beneficial to consumers and small businesses. Continue Reading
Op-Ed: Banklike data security rules for retailers would reduce breaches
Target’s recent settlement with 47 states and the District of Columbia over the retailer’s 2013 data breach brought to mind this well-known John F. Kennedy quote: “There are risks and costs to a program of action — but they are far less than the long-range cost of comfortable inaction.” The $18 million settlement is in addition to $202 million in legal fees and other expenses resulting from the breach, in which hackers stole data from up to 40 million credit and debit cards of shoppers who had visited Target stores during the holiday season. Continue Reading
The Durbin amendment: The ultimate double whammy
The Financial CHOICE Act, which begins to untangle the web of harmful rules that Dodd Frank put in place, is likely to pass the House this week. That’s very good news for community banks and credit unions, but it doesn’t mean Congress’s work on financial reform is done. One CHOICE Act provision, repeal of the Durbin amendment, was left behind. That’s why, after wrapping up the CHOICE Act, the House Financial Services Committee must go back and pass Durbin amendment repeal again. It’s already done so in two separate congresses—because it’s the right thing to do. Repeal will help the community financial institutions that are the backbone of our economy. And it will prevent the retail industry from continuing to pick the pockets of consumers. Continue Reading
Op-Ed: Time to Repeal the Durbin Amendment
What if I told you Congress was about to pass an amendment that could raise food prices, make it harder to find and maintain a free checking account, and enrich big box retailers who, despite an ongoing $8 billion annual windfall, are rapidly eliminating American jobs? I suspect most readers would be outraged, calling their representatives or lining up at town halls. Well that’s what they should be doing. But since Congress already enacted this bad idea, repeal is what consumers should be asking for. Continue Reading
Congress Should Repeal the Durbin Amendment on Debit Card Transactions
Joint trades op-ed signed by ABA, CBA, CUNA, EPC, FSR, ICBA and NAFCU Policymakers in Washington regularly trigger the law of unintended consequences, hurting the very people they profess to help. A prime example is the Durbin Amendment, a last-minute addition to the Dodd-Frank Act that placed the Federal Reserve in charge of pricing debit-card transactions and established new rules for how those transactions are routed. Continue Reading
Op-Ed: Small Merchants Want Interchange Flexibility and Value, Not Price Caps
Over the last few months, merchant lobbying groups have stormed Capitol Hill requesting two things: that lawmakers sink federal tax reform by opposing border adjustability and that they support federal price controls on debit interchange fees. On the latter, at least, Congress isn’t listening. The House Financial Services Committee has just released the discussion draft text of the Financial CHOICE Act, which would repeal those price controls. Chairman Jeb Hensarling (R-Texas) deserves credit for his leadership on this issue. Repealing the price controls might just be what small retailers really want. Continue Reading
It’s merchants who are trying to protect their profits
Retail lobbying groups will descend on Capitol Hill this morning. They’ll have a few things on their agenda, including arguing that Congress should keep the 2010 Durbin Amendment, which set price controls on debit interchange fees and imposed new regulations on the handling of debit transactions. We know what these groups, which primarily represent big-box merchants and franchisor corporations, will argue. They’ll say that the Durbin Amendment preserves a free market and that consumers will suffer without it. As I’ve written in these pages before: Lawmakers shouldn’t believe these “alternative facts.” Here’s what’s really happening. Continue Reading
Small Banks And Credit Unions Paying Millions For Durbin Amendment
Last fall, the House Financial Services Committee passed a Financial CHOICE Act that repealed harmful Dodd-Frank Act price controls. That provision would have benefited consumers and small businesses and strengthened small banks and credit unions. The new Congress not only should reconsider it—it should send it to the president’s desk. These price controls, which apply to interchange fees on debit cards issued by some banks, were added to the Dodd-Frank Act at the last minute and without a single hearing. They weren’t a vital part of the post-collapse legislation, but rather an unrelated proposal offered by Sen. Richard Durbin (D-IL) that merchant lobbying groups had been pushing for a while. Continue Reading
ICBA: Don’t buy merchant groups’ latest Durbin argument
A Durbin do over is in the works, and that’s a good thing. Back in 2010, the Durbin amendment, which caps fees on debit-card transactions, was snuck into Dodd-Frank at the 11th hour as a giveaway to the retail sector. Fast forward to 2017 and we see two things—retailers have pocketed the profits intended and promised to consumers, and Congress has an opportunity to right bad public policy in the form of price fixing. Continue Reading