WASHINGTON—NAFCU, CUNA and four other financial trade groups have written lawmakers in support of legislation to repeal the Durbin amendment on debit interchange, which was introduced Tuesday by Rep. Randy Neugebauer (R-TX), chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.
The legislation, HR 5465, signals growing support in the House Financial Services Committee for repealing the Durbin amendment, which is also being targeted for repeal by full committee Chairman Jeb Hensarling (R-TX).
In a joint letter to Hensarling, the signers emphasized that consumers are not being helped by the amendment and that credit unions and community banks are being hurt.
"We support a well-regulated payment system based on laws that provide a framework for constant product improvement, but 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 signers wrote. "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."
The Durbin amendment, passed as part of the Dodd-Frank Act, required the Federal Reserve to cap debit interchange fees charged by financial institutions with $10 billion or more in assets. The real effect has been to reduce interchange fees across the board, but the price caps, which reduced costs for retailers, have not resulted in the promised savings for consumers at the check-out line, NAFCU noted.
Last week, NAFCU President and CEO Dan Berger wrote House leaders to hit back at merchants’ claims that savings from the Durbin amendment’s debit interchange price controls benefit consumers. He said the cap has instead created a $36-billion windfall for merchants.
Berger welcomed Neugebauer’s legislation upon its introduction. “NAFCU and our members thank Chairman Neugebauer for his leadership on this issue and for his commitment to reversing this devastating amendment that has enriched merchants, driven up costs for financial institutions and generated no net benefit to consumers,” Berger said. “We look forward to working with the chairman, his subcommittee and the full House Financial Services Committee to eliminate this ill-advised provision.”
In addition to NAFCU and CUNA, the American Bankers Association, Consumer Bankers Association, Financial Services Roundtable and the Independent Community Bankers of America also signed the letter.