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Last fall, the House Financial Services Committee passed a Financial CHOICE Act that repealed harmful Dodd-Frank Act price controls.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.

Durbin amendment supporters argued small banks and credit unions wouldn’t be harmed by the price controls because institutions with less than $10 billion in assets were exempt. They also claimed retailers and merchants would pass on savings to consumers through lower prices.

It’s been six years since those promises were first made, and that’s clearly not what’s transpired. We now have a number of studies that demonstrate just what a failure the Durbin amendment has been.

 

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