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Groups echo NAFCU's call against expanding Durbin Amendment
More than a dozen advocacy groups sent a letter to President Donald Trump, Senate Majority Leader Mitch McConnell, R-Ky., and House Speaker Nancy Pelosi, D-Calif., echoing NAFCU's efforts to push back against attempts to extend the Durbin Amendment of the Dodd-Frank Act – which places a price cap on interchange fees on debit card transactions – to credit cards in the wake of the coronavirus pandemic.
"Proponents of the harmful Durbin Amendment are once again looking to pull the wool over consumers' eyes while our nation is fighting a national pandemic by advocating to expand this failed policy," said NAFCU President and CEO Dan Berger last month in response to extension efforts. "In the aftermath of the 2008 financial crisis, the Durbin Amendment passed with almost no debate or study while its proponents promised consumers billions of dollars in savings via lower prices through a government-sponsored price control on interchange fees. However, these savings never found their way into consumers’ wallets.
"Instead, the savings ended up in retailers' and merchants’ coffers while consumers also saw fewer free checking options and the elimination of debit reward programs. If history is any lesson, the COVID-19 pandemic is no time to be expanding the failed policies of the past, and it is imperative Congress reject expanding this anti-consumer policy," Berger argued.
NAFCU has long urged for a repeal of the Durbin Amendment, arguing that merchants have not passed the benefits on to consumers while retail prices keep rising. Although the amendment sought to exempt smaller institutions from the fees, the price control put in place by Congress has trickled down to also affect credit unions under $10 billion in assets.
In the coalition letter sent Monday, the groups shared NAFCU's sentiment that extending the interchange price caps to credit cards would hurt consumers.
"Extending this policy error to credit cards, particularly during this time of economic fragility, would cause further devastation," they wrote. "Consumers collect roughly $40 billion in annual rewards from credit cards…and banks and credit unions' ability to both provide free credit cards to consumers and consumer rewards could be imperiled. This would harm small entrepreneurs as well, as they use business credit cards as a prime source of financing."
NAFCU will continue fighting against efforts to expand the Durbin Amendment and has encouraged credit unions to contact lawmakers and urge opposition to extend interchange price caps.