Study by Federal Reserve Economists Shows the Durbin Amendment Is a Failed Policy

by Sarah Grotta 0

 A column in The Hill illuminates a new study recently published by the Board of Governors of the Federal Reserve Bank that investigates the effectiveness of the Durbin Amendment which capped interchange rates for some debit cards. The 42 page study can be found here. The Hill blogger writes that the report support the idea that the legislation, now Regulation II, has been detrimental to the marketplace:


The new study recently published by two Federal Reserve economists provides definitive proof, once again, that the Durbin amendment is a failed public policy. This deep dive examines the impact these price controls have had on consumers, and comes to the same conclusion that we and many others have been telling Congress for years: it hurts the very people Congress says they are trying to protect.

Despite the report’s findings, the current environment in Congress will most likely not allow for a discussion around changing or reversing debit interchange caps:

Unfortunately, there was a wasted opportunity earlier this spring, when Congress decided against trying to repeal the Durbin amendment as part of the CHOICE Act. We appreciate those who fought the good fight including House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Reps. Blaine Luetkemeyer (R-Mo.), and Ted Budd (R-N.C.). It is my hope that this study will provide more firepower to convince their colleagues in Congress to do the right thing.

What the report may do is to give support for those are fighting against a growing sentiment that credit card interchange also needs to be controlled.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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