WASHINGTON -- The Financial CHOICE Act, legislation that repeals the debit-card interchange fee reform, passed out of the House Financial Services Committee by a 30-to-26 vote on Sept. 13.
U.S. Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, recently introduced H.R. 5983, the Republican alternative to the Dodd-Frank Act that seeks, among other goals, to repeal debit-card reforms created by the Durbin Amendment to the Dodd-Frank Wall Street Reform Act.
The new legislation, if it becomes law, would repeal the Federal Reserve’s cap on debit-card swipe fees and undermine competition, according to the National Retail Federation (NRF). The proposed bill would allow for new, higher, hidden swipe fees that could more than double without competitive routing options and the cap that are currently in place, it said.
“Billions of dollars that retailers have saved under this cap have been passed on to their customers, and the vast majority of consumers surveyed have made it clear that they want those savings to continue,” said Mallory Duncan, NRF senior vice president and general counsel.
“Repealing this important consumer protection measure would drive up the price of almost everything consumers buy and create an unearned windfall for the nation’s largest banks,” he said. “Big banks can’t be allowed to take yet another bite out of the consumer spending that drives the nation’s economy.”
Lyle Beckwith, senior vice president of government relations for NACS, said, “NACS is deeply disappointed at the House Financial Services Committee’s vote to report the controversial and misnamed ‘Financial Choice Act’—which includes repeal of the highly effective, pro-competition and pro-consumer debit swipe fee reform—but given the bipartisan opposition that arose even as the bill was rammed through committee, repeal efforts should not move forward.”
“While the bill’s sponsors inserted the acronym CHOICE in the bill title—standing for ‘creating hope and opportunity for investors, consumers and entrepreneurs’—the act as currently constituted would instead generate more costs and lost opportunity for entrepreneurs, higher prices for consumers and greater monopoly profits for the credit-card giants by eliminating competition in the debit-card arena,” he said. “In the end, it is clear that the bill in its current form lacks the support necessary to get through Congress, given its potential harm to competition, consumers and small business.”
Referring to the bill as a whole, Hensarling said, “Democrats just voted against a bill that increases penalties against those who commit financial fraud. They just voted against a bill that ends taxpayer-funded bailouts, and they just voted against legislation that provides relief from Washington’s crushing regulatory burden for small banks, credit unions and consumers.”
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