Statement from Molly Wilkinson, executive director of the Electronic Payments Coalition (EPC) on the markup of Chairman Jeb Hensarling’s (R-TX) Financial CHOICE Act:
WASHINGTON, D.C. (September 13, 2016) – The Electronic Payments Coalition thanks Chairman Hensarling for leading efforts to repeal the Durbin Amendment as part of the Financial CHOICE Act. We applaud members of the House Financial Services Committee for acknowledging that the Durbin Amendment required repeal.
The last six years confirm dire warnings from Democrats and Republicans alike that the Durbin Amendment hurts many of the same consumers the law was intended to help. Studies from Federal Reserve Banks in Boston and Richmond, as well as research by George Mason University Professor Todd Zywicki and Phoenix Marketing International, prove that Merchants failed to pass the savings from reduced interchange fees along to their customers and instead pocketed an additional $6 to $8 billion a year on the backs of those same consumers.
But the Durbin Amendment’s harmful consequences are not just numbers and statistics—those that have been hardest hit are Americans who live paycheck to paycheck.
Over the last six years, consumers have not seen the savings from the Durbin Amendment that retailers promised would be passed on to them. Instead, big box stores have used the Durbin Amendment’s artificial price controls to pad their bottom lines with a $36 billion—and growing—handout.
The Durbin Amendment made it even harder for our nation’s small businesses to compete against big-box stores. In addition to mom and pop stores, small financial institutions—pillars of America’s Main Street economy—were also hit. Small banks and credit unions that were supposed to be exempt from this law are still forced to comply with the new network routing and exclusivity provisions. These provisions require card issuers to add an additional, “unaffiliated” payment network to their debit cards — a process that involves substantial and recurring administrative costs and shifts choice from consumers to merchants.
As many on both sides of the aisle feared before the Durbin Amendment became law, consumers, small business owners, and community banks and credit unions have suffered negative impacts year after year. In 2010, 71 Democrats and 60 Republicans wrote a joint letter expressing ‘grave concerns’ that the policy would ‘harm both consumers and the small financial institutions that help drive our economic recovery.’ These same fears were echoed by Former Financial Services Committee Chairman Barney Frank who also spoke out against instituting price controls.
Chairman Hensarling said earlier this year, ‘If we want strong economic growth and more freedom, we must empower Americans, not Washington bureaucrats.’ We believe a great start lies in this effort to end the failed Durbin Amendment and its unnecessary burdens on consumers, small businesses, and our community banks and credit unions.
To learn more about the harmful effects of the Durbin Amendment, read the letter EPC sent to the House Financial Services Committee this summer and the letter EPC members [American Bankers Association (ABA), Consumer Bankers Association (CBA), Credit Union National Association (CUNA), Financial Services Roundtable (FSR), Independent Community Bankers of America (ICBA), and National Association of Federal Credit Unions (NAFCU)] sent to Chairmen Hensarling and Neugebauer in support of repealing the Durbin Amendment.