Tuesday, February 08, 2011

Banking Community Urges Congress to Nullify Durbin Interchange Amendment to Dodd-Frank

The American Bankers Association and the state bankers associations sent a joint letter to the Senate and House urging Congress to stop the implementation of the Fed’s interchange proposal implementing the Durbin interchange amendment in the Dodd-Frank Act. The banking groups said that the Durbin Amendment would cause severe harm to the entire banking industry and, in particular, to community-based banks and the communities they serve…They strongly urged Congress to intervene immediately to stop the Federal Reserve’s interchange rule from being implemented.

The letter explains that the Fed’s proposed rule is very restrictive, giving no consideration to the overall costs to maintain or improve the U.S. payment system, the full costs that banks bear to provide the service, the costs of fraud and fraud prevention (the vast amount of which is borne by the banking system), and the need for a return on capital.

ABA and the state associations also pointed out that Congress passed the interchange amendment without any Congressional hearings or informed consideration of the amendment’s impact on consumers, the economy, and banks.

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