The Durbin Amendment has failed consumers, low-income families and credit unions CUNA wrote Monday to U.S. House Financial Services Committee leadership. CUNA and other financial trade organizations wrote in support of a provision in the Financial CHOICE Act (H.R. 5983) that would repeal the Durbin Amendment prior to the committee’s markup of H.R. 5983.
The Durbin Amendment, an addition to the Dodd-Frank Act, sets government price controls on debit card interchange fees.
“That tangential addition to the act was made without any hearings or analysis, and was sold on the promise of delivering lower prices to consumers. A so-called exemption was supposed to 'protect' small community banks and credit unions from the law’s harmful price controls,” the letter reads. “The Durbin Amendment has not delivered on any of these promises, providing benefits only to retailers, and must be repealed.”
The letter goes on to highlight that retailers pledged to use the savings realized under the Durbin Amendment to serve consumers through actions such as lower prices and other advantages.
“Significant research--including a recent study by the Federal Reserve Bank of Richmond--has found that more than 75% of merchants did not change their prices after the Durbin Amendment was implemented,” the letter reads. “In fact, according to the study, nearly one in four merchants have actually increased prices post-Durbin.”
CUNA also pointed out that since the implementation of the Durbin Amendment retailers have seen more than $8 billion in benefits, while the availability of consumer-friendly financial products has decreased and the unbanked population has increased by roughly 1 million.
The letter also points out that the intended “exemption” for financial institutions with less than $10 billion in assets has failed to protect small entities.
Since the amendment’s passage, average interchange fee for “exempt” issuers has fallen 16.6% for PIN transactions and 5.2% for signature transactions, therefore reducing total interchange revenue.
The markup is scheduled to begin at 10 a.m. (ET), and will be streamed live on the committee’s website.
CUNA President/CEO Jim Nussle also wrote to the committee Monday in support of a number of other provisions in the Financial CHOICE Act.