Retailers Lobby To Save the Durbin Amendment, but the Battle May Already Be Won

Retailers organized by the National Retail Federation and the Merchants Payments Coalition are scheduled to descend on Washington, D.C., on Wednesday to urge Congress to preserve the Durbin Amendment within the ever-controversial Dodd-Frank Act. One close observer of the political and banking scenes, however, believes the amendment will survive despite Republicans now having control of both houses of Congress and the White House.

“Dozens of retailers” will be in the capital to lobby for retaining the amendment, the NRF said in a statement. Before they head out, they’re scheduled to get a pep talk from the amendment’s namesake sponsor, U.S. Sen. Richard Durbin, D-Ill., and U.S. Rep. Peter Welch, its chief backer in the House.

Many of the merchants also are expected to attend a House Financial Services Committee hearing to consider the proposed Financial Choice Act. That bill from committee Chairman Jeb Hensarling, R-Texas, aims to substantially alter Dodd-Frank, the sweeping law Congress passed in 2010 in the wake of the recession to rein in perceived financial-industry abuses. Many Republicans and bankers say Dodd-Frank has put too many restrictions on the industry.

A two-paragraph section of Hensarling’s nearly 600-page bill would repeal the Durbin Amendment in its entirety. The amendment’s debit card interchange price cap cut big banks’ debit interchange revenue in half, and it also imposed routing requirements intended to give merchants more debit-network choices.

No retailers were invited to speak at Wednesday’s hearing even though the Durbin Amendment “has saved merchants and their customers more than $40 billion over the past five years,” the NRF said. Instead, Hensarling plans to focus on broader issues such as banks’ capital requirements and penalties to deter financial fraud. But the NRF will submit written testimony to the Financial Services panel and is running digital ads and circulating petitions in support of the amendment.

“Debit reform has been settled law for the better part of a decade,” NRF senior vice president and general counsel Mallory Duncan said in an op-ed published in The Daily Caller, a Washington political publication. “Repeal would bring back the monumental unfairness of the rigged, uncompetitive market that existed before debit reform was enacted,” said Duncan, who also is chairman of the Merchants Payments Coalition lobbying group.

The Durbin Amendment very well could survive even without the new show of merchant support. While Republicans in Congress often say they want to get rid of it, doing so would put them squarely in the middle of a fight between two well-funded constituencies—bankers and retailers, according to Douglas Elliott, a partner in the public policy practice at New York City-based consulting firm Oliver Wyman.

“It’s always safest to just let the status quo sit,” Elliott told an audience Monday at the NACHA Payments 2017 conference in Austin, Texas. The former banker was speaking about how the new Trump Administration and Republican-controlled Congress might affect the financial-services industry.

If Republicans vote to repeal Durbin, big retailers such as Wal-Mart Stores Inc. and others “are going to be running a lot of ads that don’t make these people look good,” said Elliott. “Do you [a Senator or member of Congress] really love the banks enough to want to do that, or do you really feel strongly enough about the principle? I don’t think there’s a majority for it.”