Durbin Fights Effort to Repeal Interchange Cap
Sen. Richard Durbin (D-Ill.) is vowing to fight a renewed effort to repeal the cap on debit card interchange fees – a part of the Dodd-Frank Act that is known as the Durbin Amendment.
“Repeal of the Durbin Amendment will not happen on my watch,” Durbin (pictured) said after Rep. Randy Neugebauer (R-Texas) introduced H.R. 5465, which would repeal the cap.
The cap was intended to help merchants and consumers and lower prices. But it hasn’t worked that way, according to credit unions, banks and other opponents, who said merchants failed to pass on savings to consumers. Financial institutions praised Neugebauer’s repeal legislation.
“The bottom line is this amendment introduced price-fixing to a formerly functional and competitive marketplace and failed to keep the dubious promises made to sell it – ultimately hurting customers,” CUNA, NAFCU, the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable and the Independent Community Bankers of America, said in a joint letter to Neugebauer and Financial Services Chairman Jeb Hensarling (R-Texas).
With the number of days that Congress will be in session dwindling and continued gridlock plaguing the Senate, the Neugebauer plan may not move in the current Congress, but it likely sets up a fight for next year.
“What the Durbin Amendment did do was artificially shift over $30 billion in revenue from one industry to another,” Neugebauer said. “Instead of promoting free market principles and technological innovation, such as enhanced data security capabilities, the Durbin Amendment was nothing more than a government action to manipulate the marketplace.”
The bank and credit union groups said the Durbin Amendment introduced price-fixing to a functional and competitive system. They said the amendment was supposed to exclude small issuers from interchange fee ceiling restrictions, but Dodd-Frank failed to include an exemption from costly network routing and exclusivity provisions.
Durbin criticized efforts to reopen the fight over his plan. Instead, he accused the credit and debit card industries of instituting new, anticompetitive fees.
He accused Visa and MasterCard of creating new fees that would penalize small banks and credit unions and deter them from doing business with other card networks.
“Continued vigilance by Congress and regulators is necessary to help expose these rigged schemes and ensure that the credit and debit card systems operate fairly for all Americans,” Durbin said.