Senate hearing rekindles debate over Durbin amendment

At a Senate Judiciary Committee hearing today, banking, credit card industry representatives and some lawmakers pushed back against proposals to expand interchange regulation to credit cards, arguing that the existing interchange fee limits imposed by the Durbin amendment more than a decade ago are hurting consumers.

Sen. Chris Coons (D-Del.) emphasized the importance of interchange revenue to supporting broad access to credit and debit cards. “Community banks, in particular, are concerned that a substantial decrease in interchange would mean they could no longer sustain card programs that extend credit to individuals who may not otherwise be able to access credit cards,” Coons said. “The issue here … is [consumers]losing access to credit and the ability of smaller issuers to participate and compete.”

Charles Kim, EVP and CFO of Commerce Bancshares in Kansas City, Missouri, agreed, noting that smaller banks may be “pushed out” of being able to issue credits cards, with larger banks filling the gap. “You’d see that element of competition just go away,” Kim warned.

Sen. Thom Tillis (R-N.C.) said that the issue of fees and their impact on competition may require additional investigation. “A lot of the things we can do to address these issues, I look forward to taking up in the Banking Committee,” he said.

In a letter to the Judiciary Committee’s leadership ahead of the hearing, the American Bankers Association and 51 state bankers associations wrote, “More than a decade later, it is clear that the Durbin amendment has hurt consumers, small businesses, and financial institutions by reducing choice, increasing costs, and reducing access to credit. Congress should not expand its scope.”