U.S. Congressman Jason Chaffetz (R-Utah) and Congressman Bill Owens (D-New York) today plan to introduce legislation aimed at repealing the debit card interchange rate-control provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the lawmakers announced.
Calling the debit-interchange portions of the legislation “a perfect example of the dangers of price controls,” the proposed legislation seeks to reverse the effects of new, lower Federal Reserve-enforced debit-interchange rates that went into effect Oct. 1 in accordance with the Dodd-Frank Act, Chaffetz said in an Oct. 12 press release.
The so-called Durbin Amendment within the Dodd-Frank Act, which lawmakers approved last year, has “compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue,” Chaffetz said, noting that previously debit interchange averaged about 44 cents per debit transaction, and the new rules cap it at about 21 cents per transaction.
The Fed’s new debit interchange rates apply only to banks with at least $10 billion in assets. Certain banks, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. recently announced plans to introduce or test new monthly debit fees to offset potential losses they say the new debit rates will force (
“The Durbin Amendment ... ultimately results in higher fees passed down to the consumer,” Chaffetz said.
The Washington, D.C.-based Electronic Payments Coalition immediately announced its support for the proposed bill.
“The Durbin amendment was forced into law despite repeated warnings from consumer advocates, regulators, and economists on the dire consequences that await consumers,” Trish Wexler, a coalition spokesperson, said in a statement. “We urge Congress to act quickly to get rid of this unprecedented and harmful amendment once and for all.”
A teleconference to announce the proposed legislation is scheduled for 4 p.m. E.S.T.
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