Dodd-Frank Debit Price Controls Condemned by Michigan Legislature, Coalition Letter
Washington, D.C., February 17, 2011 – Today, the House Financial Services Committee is holding a hearing on Dodd-Frank's Durbin Amendment, which puts below-cost price controls on what retailers pay to process debit cards. John Berlau, director of the Competitive Enterprise Institute's Center for Investors and Entrepreneurs, is available for comments on the regressivity of a measure shifting the costs of debit card processing from some of the nation's wealthiest retail chains to consumers.
"The effects that card holders are already seeing in anticipation of the Durbin Amendment include a curtailment of free checking or a requirement of a much higher balance to maintain it. If the rule goes through, future effects likely would be reduced rewards and the other new fees. And despite technical exemptions from some (but not all) parts of the measure, community banks and credit unions will still likely be hit as the network interchange rate is forced to change."
Berlau hails two new developments in the debate. One is the Michigan legislature's bipartisan (and in the state Senate, unanimous) resolution against the Durbin Amendment, the first-ever state resolution against a portion of Dodd-Frank. In the top story in today's American Spectaor he writes, "This may not yet be Waterloo for the Durbin Amendment, let alone Dodd-Frank, but it will certainly add to the increasing scrutiny."
The other development is a coalition letter to House Financial Service Committee Chairman Spencer Bachus and Ranking Member Barney Frank -- both of whom have expressed concern on the Durbin Amendment's effects -- that CEI signed with other groups calling for repeal, delay or substantial revision of the Durbin Amendment. The groups (and there will likely be additional signatories) are CEI, 60 Plus Association, the Heartland Institute, Americans for Tax Reform, the American Consumer Institute, and Tea Party WDC. The letter states, "the law and the regulations have significant problems on a variety of fronts, particularly their impact on consumer and small payment card issuers."
Berlau will be monitoring the hearing and will be able to comment as developments break.
› Berlau can be reached at email@example.com or at his cell, (202) 415-3192
› Read more by John Berlau on CEI.org.