Removing Barriers Blog

Stand-alone Repeal of Durbin Amendment Bill Introduced
Posted June 15, 2016 by mcarew

Last week, in his speech outlining reforms to Dodd-Frank, Financial Services Committee Chairman Jeb Hensarling announced that the package would include a repeal of the Durbin Amendment. The Durbin Amendment requires the Federal Reserve to limit the interchange fees charged to retailers on debit card transactions. While the intent of the amendment was to pass the fee savings back to consumers, retailers have kept most of the revenue from the price controls (an estimated $36 billion).

While the Durbin Amendment repeal is part of the larger Financial CHOICE package that Chairman Hensarling unveiled last week, Financial Institutions and Consumer Credit Subcommittee Chairman Randy Neugebauer (R-Texas) today introduced a stand-alone repeal of the Durbin amendment, H.R. 5465.

Along with several other banking trade associations, we sent sent a letter strongly supporting this new legislation, and providing research and statistics demonstrating how the Durbin Amendment has not actually helped consumers, and has greatly increased payment processing costs for small institutions. 

Our letter also expressed support for well-regulated payment system based on laws that provide a framework for constant product improvement. However, we believe the Durbin Amendment did not serve any traditional regulatory purpose—it simply enshrined into law a “permanent” economic benefit for one well-heeled industry. 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.

According to the regulatory burden study that we commissioned along with the Leagues, reduced revenue resulting from the Durbin Amendment has been conservatively estimated at $1.1 billion, so we are grateful for the leadership of Rep. Neugebauer and Chairman Hensarling on repealing this amendment. While neither the stand-alone Durbin repeal nor the larger Financial CHOICE Act are likely to be signed into law this year, we will continue to work with Congress on this and other matters that would provide regulatory relief for credit unions.