January 19, 2012
The Durbin Amendment, which implemented debit card interchange price controls on big banks in October of last year, has ultimately cost some U.S. banks more than $1.1 billion in reduced fourth quarter revenue, according to a report by Digital Transactions.
The report calculated the total loss based on what seven large banks disclosed about Durbin’s impacts in their fourth quarter earnings report this week.
The bank that took the bulk of the hit from Durbin is Charlotte, N.C.-based Bank of America Corp, which stated that the amendment siphoned $430 million from its fourth quarter financials. Similarly, Wells Fargo stated that debit interchange declined by $365 million and Digital Transactions estimates that JPMorgan Chase & Co. lost $120.4 million. Other banks that posted significant losses are U.S. Bancorp, PNC Financial Services Group Inc. and BB&T Corp.
Coined by U.S. Senator Richard Durbin, D-Ill., the Durbin Amendment was part of 2010’s Dodd-Frank Act. It required the Federal Reserve Board to set “reasonable and proportional” debit card interchange limits on financial institutions with over $10 billion in assets.
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