The House Financial Services Committee today approved the Financial Choice Act, a major regulatory reform bill introduced by committee chairman Jeb Hensarling (R-Texas). It passed by a vote of 30 to 26, with no Democrats voting in favor and one Republican, Bruce Poliquin of Maine, voting against as well.
ABA EVP James Ballentine thanked Hensarling for introducing the bill. “It is clear that regulatory reforms are needed to stop banks from continuing to disappear — including 1,708 institutions since the passage of Dodd-Frank — and allow them to continue to serve their customers and communities,” he said. “We applaud the chairman for including several important measures in his Financial Choice Act, including a repeal of the Durbin Amendment, an ill-conceived government price control that has reduced access to low-cost bank accounts; the TAILOR Act, which requires that regulations be tailored to fit an institution’s business model and risk profile; and other provisions that would eliminate unnecessary compliance problems and costs.”
With limited time remaining before the November elections, the Financial Choice Act is not expected to be brought to the House floor this year. However, it may serve as a template for regulatory relief legislation in the new Congress.
ABA and other trade associations representing nearly every bank and credit union in the U.S. offered strong support for the provision in the Financial Choice Act that would repeal the Durbin Amendment. Section 335 of the bill would roll back the controversial amendment, which the associations said has led to the erosion of fee-free banking services, increased costs for banks to deliver products and services to their customers and increased the number of unbanked consumers.
“The Durbin Amendment was tacked onto the Dodd-Frank Act at the last minute… without any hearings or analysis, and was sold on the promise of delivering lower prices to consumers. A so-called exemption was supposed to ‘protect’ small community banks and credit unions from the law’s harmful price controls,” the groups wrote. “The Durbin Amendment has not delivered on any of these promises, providing benefits only to retailers, and must be repealed.”
In addition to driving up the cost of banking services, the groups pointed out that the Durbin Amendment has also slowed innovation, presenting “one of the leading obstacles to the development of a low-cost, highly functional mobile banking platform that could provide not only essential financial services for millions of low-income and young consumers, but also their first step toward full financial inclusion.”
Echoing the groups’ sentiments in an American Banker op-ed today, Rep. Randy Neugebauer (R-Texas) added that consumers have seen almost none of the price decreases promised by the retail lobby. “While consumers wait for the promised cost savings to come their way, what they have received is an adverse impact on their options for banking services,” he wrote. “The very consumers the amendment was intended to help are losing at both ends of the transaction.” Neugebauer recently unveiled his own separate piece of legislation — H.R. 5465 — to roll back the Durbin Amendment.