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The Dodd-Frank Act Five Years Later: Are we More Stable?

This congressional testimony summarizes the effects on consumers and the economy of Dodd-Frank, the Durbin Amendment the Consumer Financial Protection Bureau, and other government regulations (such as the CARD Act of 2009) enacted in the wake of the recent financial crisis. The testimony notes that the combined effect of these laws and regulations has resulted in higher bank fees, a dramatic reduction in access to free checking, an increase in the number of unbanked consumers, a dramatic reduction in access to credit cards for low-income consumers, and continued low access to mortgages, especially among lower-income and higher-risk borrowers. In addition, because of the crushing and disproportionate burden of Dodd-Frank’s regulations on smaller banks, the law has promoted consolidation of the banking industry and forced many smaller banks to exit certain product markets, especially mortgages. This combined effect has reduced choice and competition for consumers. Finally, the lack of democratic accountability over the CFPB has resulted in an agency defined by bureaucratic overreach, resulting in an invasive and reckless data-mining project and assertion over many industries and products that stand outside of the agency’s authorized jurisdiction.
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Electronic Payments Coalition |

On the Third Anniversary of the Durbin Amendment, 94% of Consumers Not Seeing the Savings Retailers Promised Them

WASHINGTON, DC – October 1, 2014, marks the third anniversary of the implementation of the Durbin amendment, a piece of legislation that was masked as reform, but was nothing more than an $8 billion annual windfall for retailers. While retailers promised they would pass along savings to consumers – savings that now amount to over $24 billion for retailers – a new survey shows that 94% of consumers have seen prices that have increased or remained the same over the past three years. This survey, conducted in September 2014 by Phoenix Marketing International and sponsored by the Electronic Payments Coalition, asked 3,400 consumers about price changes they have observed at a variety of retailers. The research shows that 94% of consumers have seen prices increase or remain the same in the 16 individual point-of-sale categories measured in the survey, and a majority of consumers have seen prices increase at pharmacies, home improvement stores, supermarkets, restaurants and gas stations, among other industries. Furthermore, some 16% of consumers report that some retailers are even imposing surcharges on debit purchases. “These survey results clearly demonstrate that most consumers have not experienced lower prices at the register, which was the consumer promise of the
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Electronic Payments Coalition |

Despite $1 Billion Annual Subsidy for Gas Retailers, Consumers Seeing No Relief at the Pump This Summer

Despite $1 Billion Annual Subsidy for Gas Retailers, Consumers Seeing No Relief at the Pump This Summer Payment Networks Voluntarily Capped Charges, But Retailers Pocketed Windfall Profits Washington, DC – July 31, 2014 – This summer, Americans are facing average retail gasoline prices of around $3.61 per gallon. Unfortunately, despite the strain that these high prices place on consumers, there is still no evidence that gas retailers are passing on any of the roughly $1 billion annual subsidy they receive from the Durbin amendment on to consumers in the form of lower prices. “Retailers convinced Congress to lower debit interchange fees by promising they would pass the savings onto consumers yet there’s no evidence consumers are seeing lower prices,” said Jeff Tassey, Executive Director of the Electronic Payments Coalition. “Likewise, Payment Networks voluntarily capped the fees that they charge gas retailers on fuel transactions in the hope that doing so would lower gas prices for consumers. Unfortunately, gas retailers took all the money and ran—sticking their customers with the bill.” In 2011, Congress passed the Durbin amendment, a provision of the Dodd-Frank legislation, which capped what retailers pay to accept debit cards, reducing interchange rates by about 70 percent; this is
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Electronic Payments Coalition |

Electronic Payments Coalition Issues Statement on the Need for Collaboration on Data Security Solutions

The Electronic Payments Coalition issued the following statement regarding recent merchant data breaches and the security of the electronic payments system: Over the last month, as many as 100 million Americans have had the unfortunate experience of learning that their personal information was compromised in a series of recent retailer data breaches. While some have tried to use this criminal activity as an opportunity to score political points and refight old battles, all participants must instead commit to further strengthening the system as a whole. The electronic payments system brings extensive benefits to consumers, retailers and financial institutions, including fast, secure and reliable transactions, but these recent merchant breaches are a reminder that the work to protect consumer information is never done. Data security is a rapidly changing and complex issue, and solutions require dedicated collaboration. All parties – retailers, networks, processors, financial institutions and others – must come together to implement solutions such as EMV and tokenization to strengthen the system and avoid future breaches. More information is available at www.electronicpaymentscoalition.org. ++++++++++++++++  About the Electronic Payments Coalition  The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions
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Electronic Payments Coalition |

Electronic Payments Coalition Issues Statement on National Retail Federation Interchange Settlement Appeal

After nearly a decade of negotiations, the court has determined that this settlement is in the best interest of all parties involved.  This is simply a political ploy by a few big box retailers – for whom enough is never enough – that disregards the millions of retailers who are supportive of the settlement.  These same tired arguments were raised over and over during the negotiations and would have been included in the final terms if they had any merit.
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Electronic Payments Coalition Issues Statement on Approval of Interchange Fee Settlement

Today, the U.S. District Court for the Eastern District of New York approved a settlement in the long-running legal dispute between retailers, payment networks and nine major card issuers over interchange fees and rules. The Electronic Payments Coalition issued the following statement:  “The long political conflict over interchange fees is finally over, settled by a well-established legal process, which brought together retailers and the card industry for a negotiated resolution. After years of mediation, dozens of meetings, and millions of pages of evidence, the parties involved have willingly agreed to settle their dispute.  “This settlement is in the best interest of all involved parties and that has been proven today with the court’s final approval.”
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Consumers Lose Under the Durbin Amendment

University of Chicago Law School Analysis Finds Consumers Will Lose $22 Billion as a Result of the Durbin amendment Nearly three years after the implementation of the Durbin amendment, consumers have yet to see the savings that retailers promised. Instead, they are paying the same or higher prices for goods and services and more in consumer banking costs. An analysis by University of Chicago Law School economists David S. Evans, Howard Chang, and Steven Joyce entitled “The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare: An Event Study Analysis” quantifies just how much consumers are expected to lose, rather than gain, from The Durbin amendment. The paper analyzes stock prices to determine the impact to consumers from the Durbin Amendment. The analysis finds that retailers gained a $7 billion yearly windfall starting in 2011 as a result of the Durbin amendment. At the same time, consumers began losing many money-saving banking benefits as a result of the Durbin amendment. These changes set off a series of consequences that ultimately will cause consumers to lose more than $22 billion.
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Federal Reserve Bank of Richmond: Debit Card Interchange Fee Regulation

The Federal Reserve Bank of Richmond published the report “Debit Card Interchange Fee Regulation:  Some Assessments and Considerations” in the third quarter 2012 issue of Economic Quarterly. The report analyzes the debit card interchange fee regulation introduced by the Durbin amendment and its first-year impact on different players in the debit card market. The report specifically notes the unintended consequences of the Durbin amendment on small-ticket sales and rising bank fees.
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BankRate.com |

Bankrate: 2013 Credit Union Checking Survey

The survey found that 72 percent of credit union checking accounts remain free and 39 percent of bank checking accounts remain free. The article notes that one reason for the difference may be that most credit unions aren’t subject to the Durbin amendment, which has resulted in a loss of revenue for many institutions. The author explains that checking account fees have been used as a way to make up for those revenue losses.
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