Durbin Amendment Fight: Who's Ready, Who's Not?
A fight to repeal the so-called Durbin Amendment could put any effort to overhaul Dodd-Frank at risk, Mallory Duncan, senior vice president and counsel at the National Retail Federation warned Tuesday.
“There’s not an appetite to have this fight again,” Duncan said, in an interview.
However, credit union officials, who favor repeal, are gearing up for that fight.
The Financial CHOICE Act being pushed by House Financial Services Chairman Jeb Hensarling (R-Texas) would repeal the amendment.
The Durbin Amendment to Dodd-Frank placed a cap on credit card interchange fees. The common name of the cap comes from its principal sponsor, Sen. Richard Durbin (D-Ill.).
The cap was intended to help merchants and consumers as well as lower prices for retail customers. However, it hasn’t worked that way, according to credit unions and other opponents, who said that merchants haven’t passed that savings on to consumers.
But Duncan and supporters of the amendment said the cap has increased competition and quality. “It was a good thing for consumers and it was a good thing for merchants,” he said.
And Duncan warned that a fight over repeal of the amendment could overshadow any effort to amendment Dodd-Frank.
“There’s a very strong feeling on Capitol Hill that they don’t want this fight again,” he said. “We’re pretty confident [that] very few members want to re-legislate this fight.”
And he added this warning to Hensarling, “It’s rare that you see a chairman put a poison pill in his own bill.”
NRF officials said that amendment supporters that make up the Merchants Payment Coalition are in the nation’s capital this week to lobby against repeal.
Also, this week, NAFCU President/CEO B. Dan Berger wrote an op-ed in The Hill newspaper pushing repeal of the amendment.
“We know the amendment hasn’t helped American families,” he wrote. “It’s been seven years since retailers promised consumers that they’d pay less at the checkout counter if Congress put price caps on debit card fees Analysis of Federal Reserve data shows retailers have pocketed about $42 billion during this period, and shoppers are still waiting for those rollbacks.”
Last year, CUNA officials wrote a letter to lawmakers pushing for repeal. “A so-called exemption was supposed to 'protect' small community banks and credit unions from the law’s harmful price controls,” the letter stated. “The Durbin Amendment has not delivered on any of these promises, providing benefits only to retailers, and must be repealed.”
However, even CUNA officials have conceded that Hensarling might have to jettison his plan to repeal the amendment in order to get his bill through the House.
Even if the repeal survives the House, Durbin last year made his position clear.
“Repeal of the Durbin Amendment will not happen on my watch,” Durbin said after then- Rep. Randy Neugebauer (R-Texas) introduced legislation to repeal the cap.
At the time, 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.