House Balks at Repealing Interchange Reform amid Dodd-Frank Overhaul
Updated June 7, 2017
Retailers are claiming victory in the battle, if not the war, regarding proposed legislation that would have repealed interchange reform included in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Eliminating interchange reform was part of the Financial CHOICE Act of 2017 (HR 10), reintroduced in April by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), but Republican leaders removed the bill’s repeal of interchange reform ahead of a full House vote.
The National Retail Federation welcomed the news saying interchange caps have saved retailers and their customers more than $40 billion. “This is a major victory for the consumers who have saved billions of dollars under [interchange] reform and for the communities where retailers have used … savings to improve customer service, create jobs and boost the local economy,” Mallory Duncan, NRF senior vice president and general counsel, said in a May 24 announcement.
“Repeal of reform would have allowed banks to return to the uncompetitive market that allowed them to set these fees as high as they liked,” Duncan said. “The progress that was made toward competition would have been lost and consumers would have seen nothing but higher prices.”
The battle over interchange in the legislation pitted retailers against banks, with the caps costing banks approximately $9 billion since the caps were instituted, analysts at Goldman Sachs Group Inc. told Bloomberg. Opponents of debit interchange fee caps have argued that any cost saving retailers promised would benefit consumers never materialized.
Despite push-back from banks, House Republican leaders determined they don’t have enough votes to overhaul Dodd-Frank if the bill includes repealing the Durbin Amendment, according to two aides who spoke anonymously with Bloomberg.
Despite the “good news,” Duncan said the NRF will continue to follow the bill to ensure that “repeal is not included in the final legislation.”
In addition to interchange reform, the Financial CHOICE Act would overhaul the CFPB and end taxpayer-funded bailouts of large financial institutions, among other mandates. The House Financial Services Committee approved the bill May 4 in a 34-26 vote and the House Rules Committee on June 6 cleared the amended bill for a full House vote, according to The Hill. The full House is scheduled to vote on the bill by Friday morning, June 9, and it is expected to pass it without Democratic support, the report said.