Bloomberg News reported yesterday that the political will does not exist to repeal Reg ii (Durbin Amendment) as proposed by House Financial Services Committee Chairman Jeb Hensarling. This is the regulation that imposes interchange rates on debit card transactions:
“I’ve said before that repeal of the Durbin amendment was the most contentious part of the bill among Republicans,” Hensarling said in a statement. “We won’t let this one provision hinder passage of an important-priority bill that will end bank bailouts and help renew economic growth for all Americans.”
House Republicans are eager to move the bill forward, as removing constraints that Dodd-Frank imposed on the finance industry is a top goal that is shared by President Donald Trump. Administration officials have repeatedly blamed Dodd-Frank for curtailing lending and economic growth.
The so-called swipe fee reform was an easy sacrifice for legislators who have their sights set on the repeal of other aspects of the regulation. Passage of the repeal that impacts debit cards would not have been a windfall for debit card revenues anyway. With the removal of the caps, the networks would have been hard pressed to increase interchange rates against the desires of a very well organized and vocal merchant community. Remember too that the largest merchants operate under negotiated rates that are below the imposed interchange rates anyway.
There is always an opportunity to revisit this issue later, but a later repeal will be a tough battle:
“This is unfortunate, but certainly not the end of this debate,” James Ballentine, an ABA executive vice president said in a memo sent to banks. The group will “continue to work with and educate members who are interested in removing this language.”
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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