Durbin Bank Fees: An Unhappy One-Year Anniversary

Washington, D.C., October 2, 2012 – One year ago this month, the Durbin Amendment debit card price controls from the Dodd-Frank financial “reform” law went into effect, greatly limiting what banks and credit unions could charge retailers to process debit card transactions. Over the past year, the costs of processing debit cards have shifted from retailers to consumers, Competitive Enterprise Institute analysts note, resulting in record-high checking account and ATM fees.

“The nation’s wealthiest retail chains may be feasting on champagne and cake on the Durbin Amendment’s anniversary, but there is nothing for American consumers to celebrate,” says John Berlau, senior fellow for finance and access to capital at CEI.

In columns in the American Spectator and the CEI blog OpenMarket.org, Berlau notes that while a Bankrate survey released last week documented a sharp dropoff in free checking, and a dramatic rise in bank fees due largely to the Durbin price controls, the nation’s retailers reaped an $8 billion windfall from these same price caps. Yet Berlau writes that lower prices for consumers, which retailers promised in pushing for the Durbin price controls, “have yet to materialize.”

Sam Kazman, CEI General Counsel, stated: “In commemoration of this event, CEI has issued a special anniversary edition of its ‘Durbin Dollar’.  It has zero real value but, compared to the Durbin Amendment, which actually harms consumers, our Durbin Dollars are a bargain.”

CEI is currently contending in a lawsuit that many aspects of Dodd-Frank are unconstitutional. Berlau concludes that the consequences of the Durbin Amendment highlight the many “other costly mandates and constitutional defects of Dodd-Frank” that are holding back economic growth.