Merchant Groups Fail To Stop House Bill That Threatens the Durbin Amendment

By Jim Daly
@DTPaymentNews

If you think the upcoming 2016 elections are only about The Donald versus Hillary, think again. A bill in the House of Representatives that would significantly alter the controversial Dodd-Frank Act and repeal its contentious Durbin Amendment passed the House Financial Services Committee Tuesday on a 30-26 vote despite heavy lobbying by pro-Durbin merchant trade groups against it.

Retailers and their allies vow to continue their fight against H.R. 5983, The Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act as it makes its way through the House. The bill’s chief sponsor, U.S. Rep. Jeb Hensarling, R-Texas, is the Financial Services panel’s chairman, and his measure has the support of financial trade groups such as the American Bankers Association.

Merchant groups opposed to H.R. 5983 include the National Retail Federation, the Retail Industry Leaders Association, the National Grocers Association, and the National Restaurant Association. They want to preserve the Durbin Amendment’s debit card interchange price controls and transaction-routing requirements.

“While H.R. 5983 narrowly passed the House Financial Services Committee, American Main Street retailers appreciated the significant bi-partisan opposition to the bill,” says a statement issued Tuesday by a coalition of retailer groups. “The bill had no minority support. Retailers call on the entire House to reject any further movement of the bill.” The statement adds that Hensarling’s bill “would repeal debit reforms that had brought free-market competition and incentives to an area where previously there was none.”

Congress passed Dodd-Frank in 2010 in the wake of the financial crisis. Most of the law covers risk control and other factors affecting how financial institutions operate, and it also created the Consumer Financial Protection Bureau. Many Republicans say the law imposed too many regulatory burdens on banks, and H.R. 5983 would eliminate or change many of them in exchange for stronger capital requirements.

The bill, however, stands little chance of becoming law this year even if the Republican-controlled Congress passes it because it faces a certain veto from President Barack Obama. But, with control of Congress and the presidency up for grabs in the November elections, it does offer the anti-Dodd-Frank forces a rallying point for 2017. Republican presidential nominee Donald Trump has gone on record saying Dodd-Frank should be repealed, says payments industry consultant Eric Grover, principal of Minden, Nev.-based Intrepid Ventures. Grover has maintained since it passed that the Durbin Amendment has been bad for the payments industry and consumers.

“The merchant lobby is laying down a marker,” Grover tells Digital Transactions News by email. “Jeb Hensarling’s Financial CHOICE Act is reform the battered banking sector and moribund economy desperately need. Letting banks opt out of much of the Dodd-Frank regulatory straitjacket by increasing their capital may be palatable for more than a few Democrats … If he wins the presidency and in February Congress passed the Financial CHOICE Act, I would guess Trump would sign it.”