GOP’s ‘Durbin Dozen’ Keeps Dodd-Frank Price Controls
Anywhere but the Senate, getting 54 votes out of 100 is a victory. And Wednesday, a bipartisan group of 54 Senators responded to concerns from community banks, credit unions, entrepreneurs, and consumers and voted for a measure from Jon Tester, D-Mont., to delay implementation of price controls on debit card processing fees from the Durbin Amendment of Dodd-Frank.
The bill would have also required certification that the exemption for smaller financial institutions and would work. It would also have ensured that banks and credit unions that issued debit cards would be able to charge retailers processing fees — called interchange fees or “swipe fees” — to recover all of their costs, which the 12-cent-per-transaction price cap proposed by the Federal Reserve to enforce Durbin’s provision do not allow.
By forcing banks and credit unions to reduce debit card transaction fees to merchants by 75 percent, the Fed rule as it currently stands (and which the Fed should now modify as much as it can to reflect the sentiment of the majority in Congress), is a government giveaway to retailers shift the cost of processing debit cards to consumers.
Consumers are already losing free checking and debit card rewards in anticipation of this rule, and Fed Chairman Ben Bernanke said last month that the revenue loss resulting from it may cause smaller banks to fail. But the GOP pro-price control caucus struck again, defeating a vote that could have been — like the repeal of the 1099 mandate from Obamacare — the first chink in the armor of Dodd-Frank.
Last time, as I wrote previously in Newsmax, 17 Republicans voted with Durbin. This time it was a baker’s dozen. An improvement, but still too many.
So here are the senators who make up the GOP’s Durbin Dozen:
Saxby Chambliss, R-Ga.
Johnny Isakson, R-Ga.
Richard Lugar, R-Ind.
Charles Grassley, R-Iowa
David Vitter, R-La.
Scott Brown, R-Mass.
Susan Collins, R-Maine
Olympia Snowe, R-Maine
Richard Burr, R-N.C.
Lindsay Graham, R-S.C.
John Barasso, R-Wyo.
Mike Enzi, R-Wyo.
Looking at the above list, the usual suspects — the “Maine sisters,” Scott Brown, Dick Lugar, and Lindsay Graham were of course well represented. But why did some otherwise rock-ribbed conservatives, who correctly blast government controls in Obamacare and other laws, suddenly back this Dodd-Frank provision setting price controls on what banks can charge retailers?
Moreover, why did Senate Republicans who thought Dodd-Frank was overreaching (Brown and the Maine sisters were the only Senate GOPers who voted for the final bill) vote for what is arguably its most intrusive provision on private markets. There are many answers, and none of them are good.
Their vote for the Durbin Amendment last year could have been simple ignorance about what the measure would do. The last Congress was famous for ramming measures through at rapid pace without debate or even much discussion. But that is not an excuse this time when credit unions and community bank were shouting from the hills about the Durbin price controls’ negative effects.
So this leaves us with the more cynical reasons why some ostensible conservatives backed these price controls: the powerful lobby of giant retailers pushing for them. Georgia Sens. Johnny Isakson and Saxby Chambliss voted for the price controls last time and against delaying them this time, for instance, after heavy lobbying from Atlanta-based Home Depot, a firm that American Banker described as “on the warpath” against interchange fees.
According to The New York Times, “Senator Johnny Isakson, Republican of Georgia, told SunTrust, the largest bank in his state, that this time he planned to vote against the bank and with . . . Home Depot.”
On the bright side, three GOP members who voted with Durbin the last time showed wisdom and courage in reconsidering their position or at least seeking a delay to minimize the rules’ burden. They are Mike Crapo, R-Idaho, James Risch, R-Idaho, and Roger Wicker, R-Miss.
Some Democrats also showed wisdom and courage. 10 had voted against the Durbin Amendment last year. Nineteen voted for Tester’s measure yesterday to delay it. (Joseph Lieberman, I-Conn., voted against Durbin the first time and missed the vote yesterday.)
Another bright spot is that most of the new or newer senator voted to delay the price controls. These include Kay Hagan, D-N.C., and Michael Bennet, D-Colo., who came to the Senate in 2009. They both cosponsored Tester’s amendment even though they had voted with Durbin the first time. And Hagan was particularly notable because her GOP colleague in the Tar Heel state, Richard Burr, chose to remain a member of the GOP price control caucus.
There was a pickup against the Durbin price controls in Florida, where Marco Rubio voted yesterday to delay this Dodd-Frank measure that his GOP predecessor, George LeMieux had supported. And in what has to be one of the most amazing acts of political courage in the century, freshman Sen. John Boozman, R-Ark., voted for the Tester delay, even though the biggest firm in his state, Walmart, strongly backs the Durbin amendment.
In fact, all freshman GOP senators, hearing the call for principle from the tea party, voted against these price controls. Sens. Pat Toomey, R-Penn., Mike Lee, R-Utah, and Roy Blunt, R-Mo., were cosponsors of Tester’s original bill to delay the Durbin-Dodd-Frank controls. And 2 out of the 3 new Democrats were even on the free-market side. West Virginia’s Joe Manchin and Delaware’s Chris Coons voted “yea” to the price control delay, while only Connecticut Dick Blumenthal voted “nay.”
Another bright spot is how the center-right was unified as a coalition against the Durbin price controls. As I noted at the Competitive Enterprise Institute’s OpenMarket.org, “33 leaders of conservative and free-market organizations — from the Competitive Enterprise Institute and Americans For Prosperity to the Christian Coalition — signed a letter supporting measures to delay the Durbin Amendment.
Americans for Tax Reform and the 60 Plus Association are both scoring a vote in favor of today’s measure from Tester as one of their key votes.”
This was a case — with some of the nation’s biggest retailers supporting price controls — in which even the establishment media could not characterize to the pro-market position as “pro-business.” And conservative and free-market groups were almost unanimously on the pro-market side.