WASHINGTON – The recent announcement by Bank of America that it will implement a $5 monthly fee to use its debit cards has prompted a renewed effort in Congress to repeal the Durbin Amendment, which sets caps on debit fees for large banks such as BofA.
The long shot bill was introduced yesterday in the House by Jason Chaffetz, R-Utah, and Bill Owens, D-N.Y., who say the controversial rule, which took effect earlier this month, hurts customers and debit card issuers.
“The Durbin Amendment is harmful for community banks, credit unions and the communities they serve. While Congress clearly intended to exempt these smaller institutions from the cap on interchange fees, it’s clear the Durbin Amendment will have unintended costly consequences for my constituents and their checking accounts,” said Owens.
Chaffetz called the measure an “egregious provision that increases the cost of doing business on everyone.”
But the bill is considered a long shot because lawmakers are expected to be hesitant to revisit the 2010 provision of the Dodd-Frank Act as it pitted two powerful constituencies against each other: banks and credit unions against retailers who favored the debit cap. When a repeal effort narrowly failed earlier this year, leaders in the Senate said it would be the last time they visited the issue.
The cap, which limits the fee to an average of 24 cents per transaction instead of the previous industry average of 44 cents, has been used by banks to justify new fees they say are needed to recoup the lost revenue. Bank of America came under harsh scrutiny after it announced it would be charging a $5 monthly fee for debit-card holders, blaming the Durbin Amendment in the process.
The cap only applies to banks and credit unions with more than $10 billion in assets, exempting all but three credit unions. But credit union representatives say the cap will affect them anyway. “The recent action of large banks imposing fees on consumers for debit card usage and checking accounts confirms what we have feared: That regulation of interchange fees is poor public policy that has opened the door to unintended consequences for consumers and the financial institutions that serve them,” said CUNA President Bill Cheney.
“While most credit unions are exempt from the cap on interchange fees, we continue to have concerns that market forces may render that exemption unworkable,” said Cheney.
