As part of their effort to providetransparency in the rules-making process, the Federal Reserve Bankhas set up a unique portal for the Dodd Frank Act (http://bit.ly/gyaeiX) entitled “Regulatory Reform”. This hasbeen my ‘go to’ site for all comments Durbin-related, providingboth interesting and predictable insights into the market reactionto this lightening rod of an amendment. Now that the draft rulesare out, the site also provides a link to the commentary the Fed isreceiving. So, this is where it really gets interesting.
Spending some time perusing the comments, I was struck by the greatnumber of consumers that have written in to voice their opinion. Infact, the majority of the comments are from consumers, not industrystakeholders or legislators. And, scattered among these individuale-mails are also a few from small business owners; some of whomprovide stark examples of the effect of interchange fees on their(small) bottom line. On the other side are consumers who express,sometimes with great wit or unintended humor, their skepticism asto the effect this amendment will have on merchant pricing. Let’sjust say, the consensus is something like – not going tohappen.
I would expect that over time, the number of comments from industryinsiders will increase as they formulate their opinions, but theywill not be able to replace the real life view that everyday peopleare providing to the Fed. When overdraft fee regulations wherebeing proposed, the Fed also asked for consumer commentary and theygot it. They have often pointed to the effect consumer opinion hadon their rules-making process. While it is frankly unimaginablethat the Fed will require merchants to pass any savings ontoconsumers, one can consider the possibility that merchants arelistening. We shall see.