Durbin Criticizes CUs and Community Banks for Distortions on Interchange
Senate Majority Whip Richard Durbin is "disappointed," with the arguments made by CUNA and the Independent Community Bankers of America in opposing his amendment to regulate interchange fees and derided the claim that small financial institutions would be hurt as "absurd."
"Even corporate spite has some boundaries, and sacrificing revenues seems inconsistent with the profit-driven actions that Visa and MasterCard have taken to date,'' Durbin (D-Ill.) wrote in a letter sent this weekend to CUNA President/CEO Dan Mica and ICBA President/CEO Camden Fine.
Durbin, who wrote that the change "will be good for consumers," urged small financial institutions to be more empathetic to the concerns of small businesses.
"Small banks should understand the predicament that their colleagues in the small business community face, as both live in a world that is all too often run by the card networks and big banks. Visa and MasterCard can universally reduce interchange fees on credit unions and banks right now, and my amendment wouldn't change that. It is the market domination that needs to change," Durbin wrote.
Mica took issue with Durbin and said in a statement that "practitioners and politicians agree: This will not work. The fact is, someone has to pay to provide this service (which clearly benefits the merchants), and credit unions cannot absorb the costs under the strictures of this proposed law."
Durbin's amendment, which is the Senate-passed version of the regulatory restructuring bill but not the House version, is scheduled to be discussed next Tuesday by the conference committee that is reconciling the two bills.
The amendment authorizes the Federal Reserve to ensure that debit card fees are "reasonable and proportional," in relation to processing costs. It excludes credit unions and community banks with assets of less than $10 billion. It also allows merchants to set a minimum or maximum amount for each transaction and let them offer additional discounts for using a certain type of card or cash.