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DEBIT CARD FEES? Blame Democrats’ Law “Dodd-Frank Bank Regulation”

Posted by FactReal on October 1, 2011

Before you blame banks for the new debit card fees, meet the real culprits:

who pushed for the 2010 Financial Regulatory Reform which led to debit card fees: President Obama, Congressman Barney Frank, Senator Dick Durbin and
Senator Chris Dodd.

In 2010, liberals passed the Dodd-Frank financial reform bill and the Durbin amendment which, as predicted, would shift retailers’ cost for accepting debit cards onto consumers:

The Durbin amendment granted regulators the authority to establish price controls on what banks could charge merchants that accepted their customers’ debit cards as payment. The resulting regulations, which took effect Oct. 1, limit what banks can charge merchants to no more than 24 cents per debit card transaction.

Critics pointed out that banks, facing $6 billion annual losses from this change, would shift the costs of debit cards from merchants to bank customers. Sure enough, Bank of America and several of its largest competitors — including Wells Fargo, PNC, HSBC, SunTrust, TDBank, and Chase — will be imposing various new fees on their customers to make up for Durbin’s folly.

Obama and the Democrat-controlled Congress aggressively pushed for a financial reform claiming that more government regulations would keep us from another economic crisis. (In fact, too much government intervention led to the 2008 financial crisis by forcing banks to give loans to people who could not pay them back.) Liberals touted the 2010 Dodd-Frank bank reform as the most sweeping change to financial regulation in the U.S. since the Great Depression. But the reality is that major banks will have to make up for lost revenue due to the new government price controls and regulations stemming from the Dodd-Frank law.

The Regulation: The Dodd–Frank Wall Street Reform and Consumer Protection Act
A.K.A.: Dodd–Frank, Wall Street Reform, Financial Regulatory Reform
Bill #: H.R. 4173
Public Law: 111-203

Democrats promised the law would:
– Protect consumers from abusive financial services practices, and for other purposes
– Promote the financial stability of the U.S. by improving accountability and transparency in the financial system
– End “too big to fail”, to protect the American taxpayer by ending bailouts

CHRONOLOGY (Source: Library of Congress)
● December 2, 2009:
The bill was proposed in the House of Representatives by Barney Frank, and in the Senate Banking Committee by its chairman Chris Dodd. (The irony: Both legislators participated in the financial meltdown of 2008)
It was introduced in the House as “The Wall Street Reform and Consumer Protection Act of 2009” (H.R. 4173)

● December 11, 2009:
The bill passed the House (223–202): 223 Democrats voted yes. No Republican voted in favor of this bill.

● May 12, 2010:

The Durbin Amendment (A.K.A The Debit Card Amendment) (SA 3989, PDF)

Democrat Senator Dick Durbin surprised legislators when he added his amendment to the Senate bill. This provision was not in the bill approved by the House.

Durbin Amendment (SA3989) to the Senate bill S. 3217 passed by the Senate (64-33) on May 13, 2010: 47 Democrats voted yes (includes Sen. Bernie Sanders (I-VT) who is the only Dem who doesn’t hide his Marxism) and 17 Republicans (many of them liberals).

The alleged purpose of the amendment:
– “To ensure that the fees that small businesses and other entities are charged for accepting debit cards are reasonable and proportional to the costs incurred, and to limit payment card networks from imposing anti-competitive restrictions on small businesses and other entities that accept payment cards.”
– The Durbin Amendment also gave the Federal Reserve the power to regulate debit card interchange fees.

The real impact:

The Durbin Amendment essentially limits the amount of money banks collect from merchants, like Target for instance, each time you use your debit card there…[P]lacing a cap on those debit card fees might be great news for retailers it would be bad news for customers. Why? Because now that the Durbin Amendment goes into effect October 1 banks will have less money coming into their pockets from the retailers. Where do you think they are going to make up for that lost revenue? You got it–me and you.

● May 20, 2010:
The bill passed the Senate with amendment (59–39): 55 Democrats and 4 Republicans voted yes.

● June 29, 2010:
The joint conference committee changed the name of the Act from the “Restoring American Financial Stability Act of 2010.”

● June 30, 2010:
Agreed to by the House (237–192): 234 and 3 RINO-Republicans voted yes.

● July 15, 2010:
Agreed to by the Senate (60–39): 57 Democrats and 3 RINO-Republicans voted yes.

● July 21, 2010:
Signed into law by President Obama – Became Public Law #111-203 (Text, PDF)

Obama celebrating Dodd-Frank Bank Regulation

“Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes,”
Obama said before signing the legislation. (NYT)
● June 29, 2011:
New rules from the Federal Reserve: (Press Release)
Following the new powers given by the Durbin Amendment, the Federal Reserve published its final rule:
– “Under the final rule, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction will be the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. This provision regarding debit card interchange fees is effective on October 1, 2011.” 
– “When combined with the maximum permissible interchange fee under the interchange fee standards, a covered issuer eligible for the fraud-prevention adjustment could receive an interchange fee of up to approximately 24 cents for the average debit card transaction, which is valued at $38.”
– “In accordance with the statute, issuers that, together with their affiliates, have assets of less than $10 billion are exempt from the debit card interchange fee standards.”

● September 30, 2011:
– Bank of America announces it will charge $5 monthly fee to some debit card users to recover from the losses resulting from the price controls imposed by the Democrat’s Financial Reform and the Durbin amendment. Other banks will do the same.

Bank of America tweeted:
Bank of America tweeted:

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