Molly Wilkinson, executive director of the Electronic Payments Coalition, argued in a Forbes report Tuesday (Feb. 7) that the new Congress under President Donald Trump should reconsider the Financial CHOICE Act that repealed price controls under the Dodd-Frank Act.
According to Wilkinson, the provision will help consumers and small businesses and increase the strength of small banks and credit unions. As a result, the new Congress should “send it to the president’s desk.” Wilkinson said the price controls, which apply to interchange fees on certain debit cards issued by certain banks, were added to the Dodd-Frank Act without a hearing and at the last minute.
“They weren’t a vital part of the post-collapse legislation, but rather an unrelated proposal offered by Sen. Richard Durbin (D-IL) that merchant lobbying groups had been pushing for a while,” said Wilkinson. “Durbin Amendment supporters argued small banks and credit unions wouldn’t be harmed by the price controls because institutions with less than $10 billion in assets were exempt. They also claimed retailers and merchants would pass on savings to consumers through lower prices. It’s been six years since those promises were first made, and that’s clearly not what’s transpired. We now have a number of studies that demonstrate just what a failure the Durbin Amendment has been.”
Wilkinson said the amendment resulted in merchant markups on everyday goods with retailers boosting their profits at the expense of consumers who had to pay inflated prices. She noted the Federal Reserve Bank of Richmond and Phoenix Marketing International have found few merchants actually passed on their savings to consumers, but rather retailers receive around $8 billion in Durbin-related savings each year.