Durbin Defends Interchange Efforts in Sharp Rebuke to JPMorgan Chase’s Dimon
Senate Majority Whip Richard Durbin told the head of JPMorgan Chase that there is “no need for you to threaten your customers with higher fees (if interchange fees rise) when you and your bank are already making money hand over fist."
In a sharply worded, 4½-page letter to Chairman/CEO Jamie Dimon, Durbin (D-Ill.) defended the needed for his amendment and admonished Dimon to stop making misstatements about it.
He took issue with Dimon’s recent statements that the amendment is “price fixing at its worst’’ and “downright idiotic.’’
Durbin said the changes are needed because the “system of price-fixing by Visa and MasterCard on behalf of thousands of banks has gone entirely unregulated.’’
He also disputed the contention that the amendment and the Fed rule don’t consider the cost of fraud.
“Fraud rates are far lower for PIN debit transactions than for signature debit transactions but Visa and MasterCard set higher interchange fees for signature debit than for PIN ostensibly to cover the higher cost of fraud,’’ Durbin wrote.
Durbin also said while JPMorgan Chase will lose revenue because of the new rule, Dimon should put it in perspective in light of the company’s $17.4 billion in profits in 2010, a 48% increase from the previous year.
The Federal Reserve has released a proposed rule on interchange but not the final version.