Interchange Fee Reform
Floor Speech
Mr. DURBIN. Mr. President, I continue to receive letters weighing in on the issue of interchange fee reform. I ask unanimous consent to have printed in the Record letters or statements from the following organizations: the Rainbow PUSH Coalition, the Main Street Alliance, Consumer Federation of America, and the National Black Church Initiative.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
April 1, 2011.
DEAR SENATOR: The Rainbow PUSH Coalition expresses its views on the Durbin swipe fee reform amendment now being debated in the Congress. Rainbow PUSH is a strong advocate of the Dodd-Frank financial reform legislation which provides critical consumer protections and safeguards against predatory lending.
The Durbin swipe fee reform amendment should be implemented as scheduled. It will usher in needed reform to bring competition, transparency and choice to the interchange system, and provide incentives for the retail sector to pass on interchange savings to lower the price of products for consumers. Numerous consumer rights organizations, civil rights groups, universities, unions, and other constituencies have weighed in to support swipe fee reform.
We respect the concerns that some groups have raised about the provision, but are unconvinced that a delay in its implementation as proposed by Sen. Tester and the American Banking Association (representing the financial services industry) will be beneficial to consumers and students, and small businesses. It appears that their interest is to maintain a deregulated environment to continue the virtual monopoly status of the credit card transaction process, and to protect their massive profits derived from debit interchange fees.
Deregulation, greed and lack of congressional oversight led to the most severe economic collapse since the great depression. But Wall Street got billions in public funds because they were deemed too big to fail--they've been bailed out and are once again recording record profits and issuing millions in executive bonuses, while homeowners and working families are still left out. The big banks are already charging consumers higher interest rates and raising consumer fees to record levels in virtually every dimension of banking and credit card use. We stand ready to meet with all concerned to ensure the implementation of a sustainable debit card system going forward.
The Durbin credit card swipe fee amendment will afford the protections and regulations that consumers need.
Sincerely,
REVEREND JESSE L. JACKSON, Sr.,
President and Founder,
Rainbow PUSH Coalition.
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March 31, 2011.
Senator DICK DURBIN,
Assistant Majority Leader, Hart Senate Bldg., Washington, DC.
DEAR SENATOR DURBIN: We write to express the National Black Church Initiative's continued support for the Durbin swipe fee amendment which we supported and was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The current interchange system is uncompetitive, non-transparent and harmful to consumers. It is simply unjust to require less affluent Americans who do not participate in or benefit from the payment card or banking system to pay for excessive debit interchange fees that are passed through to the costs of goods and services. As a result, NBCI does not support Congressional delay of implementation of the new law.
As you may know, The National Black Church Initiative (NBCI) is a faith-based coalition of 34,000 churches comprised of 15 denominations and 15.7 million African Americans committed to eradicating racial disparities and improving the lives of African Americans nationwide.
We oppose efforts to delay implementation of the Durbin amendment through Congressional action. The new law gives the Federal Reserve adequate authority it can use without delay to make sure that the debit interchange reimbursement financial institutions receive covers their legitimate, incremental costs for providing debit card services. We know that there are banks, like BB&T for example, who would like to delay this process. Their continued profit off the backs of low income African Americans will no longer be tolerated and we will continue to advocate on behalf of laws that support our agenda.
From a consumer point of view, the current interchange system is not defensible. Feeble competition in the payment card marketplace has led to unjustifiably high debit interchange fees that the poorest Americans, generally cash customers, are required to subsidize at the store and at the pump.
Thank you for your consideration of our views. Please contact us directly to discuss these important issues.
Sincerely,
REV. ANTHONY EVANS,
President, National Black Church Initiative.
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March 31, 2011.
To: U.S. Senators and Representatives.
Re Main Street Alliance support for implementing debit interchange protections for small businesses in the Restoring American Financial Stability Act of 2010.
DEAR SENATOR DURBIN: The Main Street Alliance, a national network of small business coalitions representing small business owners across America, writes to express our strong support for the provision of the Restoring American Financial Stability Act of 2010 that set out to ensure that debit card interchange fees are reasonable and proportional. This provision is an important step toward putting small businesses back on stable footing by limiting burdensome fees on small businesses when we process debit transactions.
Small businesses have faced ever-rising fees on debit card transactions over the years. For some businesses, these interchange fees have grown to the point that they represent some of the highest operating costs, rivaling the costs of labor and utilities. There is no such thing as fair competition in this market: the card companies have a duopoly. Limiting fees to twelve cents per transaction, as proposed in new rules, will free small businesses from disproportionate and burdensome costs, allowing economic growth.
The new rules are a step forward, a step toward parity and a reasonable balance. We ask that these rules not be delayed further. Implementing them as planned this summer will provide a shot in the arm for small businesses and our local economies. Small businesses are better off with these protections; we urge you not to allow the lobbying tactics of the big banks deter the enactment of rules that protect small business.
The country is counting on small businesses to serve as an engine of economic recovery and create the jobs we need to get people back to work across America. The debit interchange provisions enacted in the financial overhaul last year and codified in the new rules support these aims. We urge you to fight efforts to delay or derail the implementation of these rules.
Mike Craighill, Soup and Such, Billings, MT; Garry Owen Ault, All Makes Vacuum, Boise, ID; Nancie Koerber, Champions Real Time Training, Central Point, OR; David Borris, Hel's Kitchen Catering, Northbrook, IL; Carson Lynch, Gorham Grind, Gorham, ME; Tammy Rostov, Rostov's Coffee & Tea, Richmond, VA.
Kelly Conklin, Foley-Waite Associates, Bloomfield, NJ; Melanie Collins, Melanie's Home Childcare, Falmouth, ME; Rashonda Young, Alpha Express, Inc., Waterloo, IA; Jose Gozalez, Tu Casa Real Estate, Salem, OR; Rosario Reyes, Las Americas Business Center, Lynnwood, WA.
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CONSUMER FEDERATION OF AMERICA,
Washington, DC.
Position of the Consumer Federation of America on Debit Card ``Interchange'' Fee Legislation and Rules
NO POSITION ON DEBIT INTERCHANGE LAW OR ON LEGISLATION TO DELAY IT
CFA did not take a position on the ``Durbin Amendment'' to the Dodd-Frank Wall Street Reform and Consumer Protection Act and has also not supported or opposed legislation introduced in Congress to delay the interchange law.
FEDERAL RESERVE SHOULD ALTER PROPOSED RULE IMPLEMENTING DEBIT INTERCHANGE LAW
CFA filed comments with the Federal Reserve in February (http://www.consumerfed.org/pdfs/debit-cards-FRB-interchange-rule-comments-2-22-11.pdf) that came to the following conclusions:
The current interchange system is uncompetitive, non-transparent and harmful to consumers. Feeble competition in the payment card marketplace has led to unjustifiably high debit interchange fees that the poorest Americans are required to subsidize. It is simply unjust to require less affluent Americans who do not participate in or benefit from the payment card system to pay excessive fees that are passed through to the cost of goods and services.
The Federal Reserve should ensure that financial institutions are reimbursed for legitimate, incremental debit card costs as it finalizes rules that implement the new interchange requirements. In particular, the Federal Reserve should increase proposed interchange price standards as allowed under law to include several specific expenses incurred by financial institutions when processing debit card transactions. If such compensation does not occur, these institutions could increase debit card and other related banking charges on their least desirable and most financially vulnerable consumers: low-to- moderate income account holders.
Once it is implemented, the Federal Reserve should pay close attention to how it affects the financial viability of small depository institutions, especially credit unions, which often provide safe, lower-cost financial services to millions of Americans.
The Federal Reserve should launch a broad, balanced study upon implementation of the effects of the rule on consumers.
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