The Wall Street Journal reports that the NAACP has joined the chorus of critics of the “Durbin Amendment” which directs the Fed to put price controls in place for debit-card fees.
“We are especially concerned about the potential impact the proposed rule could have on the ability of low- and moderate-income consumers to gain access to affordable small bank products and services,” Ms. Bair said in a letter sent Thursday to Federal Reserve Chairman Ben Bernanke.
Democrats have joined in the effort to slow down the new rules which are due in April.
This is a rare instance of a bi-partisan effort to slow down or stop legislation that was not debated or carefully reviewed when it passed. We applaud the effort to take a second look at the Durbin Amendment and hope that this attitude is contagious. Now that the NAACP (and the National Community Reinvestment Coalition) have gotten the message that the proposed price controls will harm the poor, we are optimistic that the Durbin Amendent to Dodd-Frank, as written, is dead.
Now the question is whether the Beltway can resist the temptation to try to fix the Durbin Amendment with “tweaks” or if it will have the wisdom to simply abandon price controls for debit cards. Who really cares about the consumer or whether the poor can avail themselves of banking services?
Remember that the reason Sen. Durbin gave all along was that his price controls that favor retailers like Walgreens and Best Buy by lowering “swipe fees” would help consumers because retailers would pass on the savings to its customers. We see it as big retailers using their political clout to get from legislation what they could not negotiate with banks and card issuers. And we do not believe retailers would pass much if any of the savings on to consumers. What is clear is that price controls would distort the banking market. If lawmakers really want to help consumers, they will remove themselves from the business of debit cards.