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"Durbin Amendment"

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Bigdaddy0381 View Drop Down
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    Posted: March/31/2011 at 13:34

The so-called "Durbin Amendment" was one of the unfortunate amendments added at the last minute to the Dodd-Frank Wall Street Reform and Consumer Protection Act.  This amendment requires the Federal Reserve to establish price controls on debit card "interchange fees," the fees that we and other financial institutions receive to process, settle, and incur the risk on debit card transactions.

It is estimated that these government price controls will cost the banking industry over $12 billion annually.  The loss of this much revenue will result in significant changes in the way we price all of our retail banking products, and will be very costly and disruptive to our clients.  The Durbin Amendment was added to the Dodd-Frank bill on the floor of the Senate, without any hearings and with almost no debate.  With the imposition of these price controls looming (they're scheduled to be implemented in July), many groups from across the political and social spectrum have come to the conclusion that the Durbin Amendment was insufficiently studied, is an egregious intrusion into free markets by the federal government, and will result in substantial new costs to consumers.  I've listed at the bottom of this email some of the diverse groups who are siding with the banking industry in calling for additional study of this matter, and a delay in the implementation of the Durbin Amendment.

With the help of the American Bankers Association, we are joining the rest of the banking industry in making sure our voice is heard on this important non-partisan matter.  If you have not already done so, I would encourage you to take a few moments to go to the following website (TAKE ACTION NOW link below), and use the tools there to construct a brief message to your elected senators and representative asking them to support legislation that has been introduced to delay these price controls for a period of time while the matter is studied more carefully.  This is entirely up to you, but if you choose to respond, you should do so very soon as a bill to delay the Durbin Amendment may be brought to a vote as early as this week.

TAKE ACTION NOW

Thank you very much for your support on this important matter.



INDEPENDENT VOICES WHO ARE VOICING CONCERNS ABOUT THE DURBIN AMENDMENT:
THE FEDERAL RESERVE
“It is possible that that exemption will not be effective in the marketplace.”   -Chairman Bernanke
OFFICE of the COMPTROLLER of the CURRENCY
“[W]e believe the proposal takes an unnecessarily narrow approach to the recovery of costs that would be allowable under the law and are recognized and indisputably part of conducting a debit card business. This has long-term safety and soundness consequences for banks of all sizes that are not compelled by the statute.”

FEDERAL INSURANCE DEPOSIT CORPORATION
“As the federal regulator of most community banks in the United States, the FDIC is concerned about the potential impact of the Board's proposed rule on small bank issuers of debit cards and their customers in contravention of Congressional intent.”

THE WALL STREET JOURNAL
The latest debacle is the looming Federal Reserve rule to fix prices on debit cards, which threatens the flow of credit to low-income Americans and promises higher fees on bank services for nearly everyone else.

CONVERGENCE of LAW INSTITUTE
“The Federal Reserve Board has been told to implement the law, but the assumptions underlying this instruction and the terms of the delegation are so uncertain and ill-defined that the agency will find it impossible to act rationally unless it receives further instruction from Congress.”

NATIONAL TAXPAYERS UNION
“Although regulators do perform their duties under a somewhat different set of circumstances than lawmakers, it is entirely appropriate for you and your colleagues to engage Congress and the Administration when you believe that certain laws could lead to untenable regulatory outcomes. For the sake of consumers, taxpayers, and the economy, we urge you to do so now.”

THE NATIONAL ASSOCIATION OF NEIGHBORHOODS
“NAN is not concerned with protecting the profits of big banks or big box retailers in this fight over transaction fees when using debit cards. However, NAN is concerned that consumers, in a growing number of at-risk neighborhoods, cannot afford to pay any more money to either side people are ‘tapped’ out.”

AMERICANS for TAX REFORM
“Quite simply, the proposed regulations are price controls that will severely disadvantage consumers and card issuers. They are not good public policy. We urge Section 1075 be repealed, revised, or at the very least delayed.”

THE GREENLINING INSTITUTE
“If the Federal Reserve shares our uncertainty about the potential economic behavior of major actors and potential consequences for unbanked Americans resulting from this rule, we would urge the Federal Reserve to outline a series of remedies that would ensure continued and enhanced access to safe, affordable basic banking products and services. “

AMERICANS for PROSPERITY
“The proposed Federal Reserve rule confirms our fears that this section amounts to a price control that will have serious unforeseen consequences, and the routing provisions abrogate contract that are serving consumers well.”

THE NATIONAL COMMUNITY REINVESTMENT COALITION
“We would be concerned with a rule that would inadvertently reduce access to debit cards and other basic banking services to low and moderate income borrowers. It is therefore imperative to subject this proposal to careful study and analysis.”

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supertool73 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote supertool73 Quote  Post ReplyReply Direct Link To This Post Posted: March/31/2011 at 13:43
Freaking government sticking its nose in it is the reason for most bank fees.  The idiots just don't get that if they make the banks pay more to operate then they have to pass the costs on to the consumers so the banks can continue to operate.  It is just a vicious cycle.
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Bigdaddy0381 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bigdaddy0381 Quote  Post ReplyReply Direct Link To This Post Posted: March/31/2011 at 13:49
I agree but hit "take action now" and maybe we can slow it down for a few years.
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supertool73 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote supertool73 Quote  Post ReplyReply Direct Link To This Post Posted: March/31/2011 at 13:54
Working at a bank I am on the ABA and UBAs direct mail list.  I sign all those things.  
Lifetime warranty and excellent customer service don't mean a thing when your gun fails during a zombie attack.

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Bigdaddy0381 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bigdaddy0381 Quote  Post ReplyReply Direct Link To This Post Posted: March/31/2011 at 13:55
Originally posted by supertool73 supertool73 wrote:

Working at a bank I am on the ABA and UBAs direct mail list.  I sign all those things.  
 
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