Here’s why the Durbin repeal got pulled from House reg relief bill
WASHINGTON — A Dodd-Frank Act overhaul bill that is expected to get a House vote in the coming weeks won’t include a repeal of caps on debit card swipe fees.
The swipe fee limits, known as the Durbin amendment, has been a flash point for banks and merchants that adds up to a $42 billion transfer between the two industries since its enactment in 2011.
Though the repeal was part of House Financial Services Committee Chairman Jeb Hensarling’s Financial Choice Act when it was approved by the panel earlier this month, it will not be part of the legislation when it goes to the House floor soon.
“I believe it belongs in the Financial Choice Act, but I recognize and respect that many members of Congress feel differently,” 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 healthy economic growth for all Americans.”
Banks and credit unions have lobbied hard for the Durbin amendment's repeal, arguing that the money saved by having lower swipe fees hasn’t been transferred to consumers as promised. They also say the lost revenue has led to fewer institutions offering free checking accounts.
But merchants and retailers argue that the price caps help small businesses around the country and a routing provision increases competition for debit networks that would otherwise be dominated by Visa and Mastercard.
The fight over the amendment’s repeal has pitted two of the more powerful lobbying groups against each other. As a result, many lawmakers from both political parties did not want to take a vote on the issue, because they have both retailers and banks in their districts.
Moreover, the Choice Act faces an uphill battle in the Senate, which makes many House lawmakers reluctant to take a tough vote on an issue that could haunt them later, particularly if the issue isn’t even likely to come up in the Senate. Voting for a provision that can be framed as a bank giveaway also could provide ammunition to their political opponents.
For their part, retailers and the financial services industry continued to lobby on the issue ahead of Hensarling's decision.
"We urge Congress to keep these protections in place on behalf of Main Street businesses across the country,” said Cicely Simpson, executive vice president of the National Restaurant Association.
The financial services industry says the biggest benefactors of debit swipe fee caps are big-box retailers like Target and Home Depot. They are at least pleased that the provision was part of the bill approved by the House Financial Services Committee.
“The House Financial Services Committee voted twice in back-to-back Congresses to repeal the Durbin amendment because members know this is a crony handout that has generated unearned billions for the big-box retailers and heartburn for their customers,” said Molly Wilkinson, executive director of the Electronic Payments Coalition. “The Durbin price controls hurt consumers, community banks and credit unions and even small merchants. This is a bad policy, and we, the Electronic Payments Coalition, are committed to repealing it.”
The National Retail Federation said it would not be taking any chances as Hensarling’s bill is still waiting to hit the House floor.
“We will continue to follow this bill to the end and ensure that repeal is not included in the final legislation,” said Mallory Duncan, the group’s senior vice president and general counsel.