WASHINGTON—Two Republican senators have proposed a measure that would, among other things, overturn a rule that exposes banks with more than $10 billion in assets to limits on debit card swipe fees.
The legislation, sponsored by Sens. Ted Cruz (R-TX) Texas and Katie Britt (R-AL), proposes to tie asset restrictions that were enacted by the Durbin Amendment after the financial crisis of nearly 20 years ago, to the rate of inflation. The restrictions apply to credit unions, as well.
Companion legislation was introduced in the House by Rep. Andy Barr (R-KY).
Cruz, who chairs the Senate Commerce Committee, and Britt, who leads the Banking Subcommittee on Housing, Transportation and Community Development, say said in a statement that the revision would free smaller banks from fee limits, as Cruz put it, “intended for much larger institutions.”
The bill proposes to raise the $10-billion asset cap against the Consumer Price Index, retroactive to the 2010 passage of the Dodd-Frank bill, which introduced the original cap.
Banks, America’s CUs Back Bill
The banking trade groups have issued statements in support of the bill, and America’s Credit Unions has also said it backs the bill.
“As credit unions grow by serving more members and keeping pace with the economy, many are swept into limits that were intended for much larger institutions,” America’s Credit Unions President and CEO Scott Simpson said in a statement. “Indexing the threshold to inflation provides needed relief and restores fairness for community-based credit unions.
“Debit interchange revenue at credit unions is reinvested into lower fees, better rates, fraud prevention, and improved services for members. When outdated thresholds reduce those resources, it is working families and small businesses who feel the impact.
“This legislation is an important step forward. But the only real long-term solution is full repeal of the Durbin Amendment,” Simpson continued. “Government imposed price controls have distorted the market and failed to deliver promised savings to consumers. While most credit unions were supposed to be protected from the impact of the Durbin Amendment, the fact is that those provisions did not work, and all have felt the negative impacts. Repeal would ensure credit unions can continue delivering affordable, secure financial services without artificial caps that miss their mark.”
The senators noted that when Dodd-Frank passed, roughly 80 banks exceeded the $10 billion threshold. Today, roughly 130 banks have exceeded the $10 billion threshold.
Swipe Fees Unchanged
Under the bill, the current swipe fees caps— 21 cents plus 0.05% of the transaction cost — would remain unchanged.
Click here to read the full bill text.
