House drops Durbin repeal; retailers ring up a win
The U.S. House of Representatives has dropped wording that would have repealed the controversial Durbin Amendment of the Dodd-Frank Wall Street Financial Reform and Consumer Protection Act voted into law in 2010 under the Obama administration.
The amendment imposed caps on the swipe fees set by the major card networks for debit card transactions, and allowed retailers a choice of networks for debit transaction routing.
The legislation, which went into effect in October 2011, has been lauded by retailers and lambasted by banks claiming that it does not allow them to recoup their own card transaction-related costs.
House Financial Services Committee Chairman Jeb Hensarling, R-TX, expressed regret about dropping the Durbin repeal effort, but said it was necessary in order to secure passage of the remainder of the House's Financial Choice Act.
"I've said before that repeal of the Durbin Amendment was the most contentious part of the bill among Republicans," Hensarling said in a statement. "I believe it belongs in the Financial Choice Act, but I recognize and respect that many members of Congress feel differently. 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."
That bill, which is set to repeal many of the banking reforms passed after the Great Recession and triggered in 2008 by the banking crisis, will get a House vote after the Memorial Day holiday.
The National Retail Federation, speaking on behalf of U.S. retailers, expressed a very different sentiment.
"This is a major victory for the consumers who have saved billions of dollars under swipe fee reform and for the communities where retailers have used swipe savings to improve customer service, create jobs and boost the local economy," said NRF Senior Vice President and General Counsel Mallory Duncan. "Repeal of reform would have allowed banks to return to the uncompetitive market that allowed them to set these fees as high as they liked. The progress that was made toward competition would have been lost, and consumers would have seen nothing but higher prices."
A report by Politico said that the issue of Durbin amendment repeal is now settled for all intents and purposes. "Senate Republican leaders have shown no appetite for taking up the issue as they craft their own bank deregulation bills," the article said.
Additionally, House members were facing substantial pushback from retailers in their districts, where they will have to stand for reelection in 2018.
Topics: Regulatory Issues