Rare News Desk
When I read Tim Lee’s op-ed in Forbes.com yesterday, I was reminded that both of Georgia’s Senators supported the Durbin Amendment when even the uber-liberal former Congressman Barney Frank admitted that it was a disaster that harmed consumers. We shouldn’t have to ask Georgia Senators to move to the right of Barney Frank or commit to fix regulations that are killing community banks, small merchants and consumers.
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A big coalition of taxpayer groups are working on a fix to the Durbin Amendment, and let’s hope Senators Isakson and Chambliss support pro-market reforms this time around.
I know, even three years ago, we were still concerned about the other shoe dropping in our financial crisis. However, the free market didn’t get us into the mess that lead to the real estate meltdown, it was the interference of government and the “pick the winners” mentality of government invading all aspects of life. If you want to read the real, unvarnished, unpolitical truth of what got us to the real estate crash of 2008, find a copy of Reckless Endangerment, read it and keep the antacids close by.
And, if we had followed Senator Isakson’s real estate reforms in 2008, we could have avoided the worst of the real estate crash. He once said, “All the success I’ve had in politics came from what I learned in real estate.” So these observations are not to criticize our senators. However, if real progress is not made in repealing some of the government overreach into the markets over the last 5 years and a “New Frontier” of returning to free markets and free men and women, the recovery some are now celebrating will not last.
Read the full article here and an excerpt below:
By way of primer, what the Durbin Amendment added to the broader Dodd-Frank law were price controls on debit card interchange fees, in the name of increasing competition in payment processing. The limits ostensibly apply to banks with over $10 billion in assets, which would have to charge debit card interchange fees “reasonable and proportional to the actual cost” of processing transactions, but that hasn’t immunized smaller banks and credit unions in practice. The Durbin Amendment also handed the Federal Reserve the power to regulate debit card interchange fees. Unfortunately, the language of Dodd-Frank forced the Fed to consider only the marginal cost of transactions when setting debit card interchange rates, rather than the overall cost of building, maintaining and improving the network. Consequently, the fee caps were set at an artificially low rate.
As a result of the Durbin Amendment, which cost banks over $8 billion in the first year alone, consumers have witnessed the disappearance of free-checking accounts, and suffered an onslaught of additional bank fees. Local credit unions and small community banks (supposedly “exempt” from the amendment) have continued to see an alarming rate of foreclosures, and local economies have continued to suffer. Additionally, consumers have yet to see savings at the check-out line – the original intent of the amendment in the first place. Rife with unintended consequences, the Durbin Amendment is a perfect example of public policy gone wrong.
Martha Zoller is the editor in chief of ZPolitics and co-host of Zoller and Bryant’s Georgia’s Morning News. You can contact her at [email protected]
