Senate hearing revives dispute over Durbin change

At a Senate Judiciary Committee hearing today, banking, charge card market agents and some legislators pressed back versus propositions to broaden interchange guideline to charge card, arguing that the existing interchange cost limitations enforced by the Durbin change more than a years back are injuring customers.

Sen. Chris Coons (D-Del.) highlighted the value of interchange income to supporting broad access to credit and debit cards. “Community banks, in particular, are concerned that a substantial decrease in interchange would mean they could no longer sustain card programs that extend credit to individuals who may not otherwise be able to access credit cards,” Coons stated. “The issue here … is [consumers]losing access to credit and the ability of smaller issuers to participate and compete.”

Charles Kim, EVP and CFO of Commerce Bancshares in Kansas City, Missouri, concurred, keeping in mind that smaller sized banks might be “pushed out” of having the ability to provide charge cards, with bigger banks filling the space. “You’d see that element of competition just go away,” Kim alerted.

Sen. Thom Tillis (R-N.C.) stated that the problem of charges and their effect on competitors might need extra examination. “A lot of the things we can do to address these issues, I look forward to taking up in the Banking Committee,” he stated.

In a letter to the Judiciary Committee’s management ahead of the hearing, the American Bankers Association and 51 state lenders associations composed, “More than a decade later, it is clear that the Durbin amendment has hurt consumers, small businesses, and financial institutions by reducing choice, increasing costs, and reducing access to credit. Congress should not expand its scope.”



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