Tuesday, October 18, 2011
"This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the fee market," Chaffetz said. "The Durbin Amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue."
Chaffetz said repealing the Durbin Amendment will fix "the disastrous consequences" of the amendment. "Congress must repeal this egregious provision that increases the costs of doing business on everyone," he said.
Owens had a slightly different take on repeal. "The Durbin Amendment is harmful for community banks, credit unions and the communities they serve," he said. "While Congress clearly intended to exempt these smaller institutions from the cap on interchange fees, it's clear the Durbin Amendment will have unintended costly consequences for my constituents and their checking accounts."
Max Gleischman, a spokesman for Sen. Richard Durbin, D-Ill., responded to the repeal effort by saying, "This new bill is another big bank bailout – nothing more, nothing less. Claims that swipe fee reforms are hurting small banks and credit unions willfully ignore reality; those institutions are exempt from the new regulation and have actually seen a surge in new accounts since reform took effect."
Gleischman added that efforts to kill swipe fee reform have tried and failed in the Senate. "Last year's reforms added fairness, transparency and competition to a market that operated for years without," he said.
The National Retail Federation protested the proposed legislation. "The banks tried to stop this law from being passed, they tried to delay it once it was passed, and they managed to water down the amount merchants and consumers will save," the NRF said in a press release. "Now that it's just barely taken effect, they are trying to repeal it before anyone can benefit. Congress needs to stop doing the bidding of the banks and think about the people who paid for the bank bailout not so long ago – consumers and Main Street merchants."
For more on the status of HR 3156, including a link to the full text, see The Green Sheet's Legislative Roundup on our website's Resources page.
A day after the anti-Durbin bill was introduced, congressional Democrats asked Attorney General Eric Holder to consider an anti-trust investigation of financial institutions on grounds they are colluding to create new fees to cover losses related to Durbin's debit interchange fee cut.
On Oct. 13, 2011, five Democratic congressmen led by Chief Deputy Whip Peter Welch, D-Vt., wrote Holder asking for the anti-trust investigation of "big banks [that] are coordinating their fee strategies in violation of federal anti-trust laws."
According to Welch, banks and their trade associations are coordinating efforts to justify fee increases to consumers after the Durbin Amendment. The letter points to statements made by executives with Wells Fargo & Co., the American Banking Association, the Independent Community Bankers Association and the Texas Bankers Association to demonstrate collusion among U.S. bankers. The representatives said Bank of America Corp.'s intention to begin charging monthly fees for use of debit cards highlighted their concerns.
"We are concerned that BofA's announcement may be a reaction to, and participation in, price signaling or collusion that has occurred among and between banks and bank associations," the letter said. "The collective pricing activity is harmful to competition, raises serious legal questions, and has led to consumers and merchants in the United States earning the dubious honor of paying the highest credit card swipe fees in the world."
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