Congress has an opportunity to right a wrong this week

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Too often, Congress passes laws, with good intentions in mind, that wind up doing more harm than good; and because of the slow and winding nature of policy implementation many of these mistakes are never revisited.

However, every now and then Congress has the opportunity to right a wrong and the House Financial Services Committee will get the chance to do just that as they consider repeal of the Durbin amendment as part of the CHOICE Act this Tuesday.

{mosads}In 2010, the Durbin amendment was tacked on to the Wall Street Reform and Consumer Protection Act in the 11th hour with little debate. The amendment put price caps on debit card swipe fees, with the promise that savings given to retailers would be passed on to consumers. But lo and behold, seven years later giant retailers have pocketed $42 billion in profits from the enactment of this legislation, while everyday Americans haven’t seen a dime in savings. In fact some studies show that consumers are paying even more for their goods despite the passage of the law.

The injustices for consumers didn’t stop there though. Loss of revenue from these price controls forced many banks to stop providing debit rewards programs and free checking to their customers. But what may seem like just some trivial perks to you and I are important financial aids to lower income consumers who rely on free checking to maintain a level of financial stability.

Community banks and credit unions were hit especially hard by these price controls because while smaller in nature, these institutions are still responsible for providing the same services, innovations and protections from cyber threats as its larger counterparts – but now with fewer resources to do so.

Ironically though, the folks who have gotten the worst deal from passage of the Durbin amendment are small businesses like those the National Black Chamber of Commerce represents.  While big box retailers will proudly tell you the Durbin amendment created a ceiling for debit card swipe fees, what they neglect to mention is it also created a floor – and in many instances that floor is more expensive than what many mom and pop shops were paying in the first place. Had the Durbin amendment never been enacted, many small businesses would be paying fewer fees and making more profit.

Some of the members of the House Financial Services Committee weren’t in Congress in 2010 and have never voted on this amendment before. Others certainly were and voted for its passage. But regardless of what led any individual representative to enact these price controls, the questions before Congress now are:

Has this legislation worked?  Is it fair that big box retailers have made $42 billion in profits, while breaking their promise to consumers? Should small businesses have to suffer just to appease their larger counterparts?

I am confident that the preponderance of evidence available on the subject will lead these members of Congress to an answer of no on all three questions  — resulting in a vote for repeal and the opportunity to right a seven-year wrong. 

Alford is the cofounder, president and CEO of the National Black Chamber of Commerce.

The views expressed by this author are their own and are not the views of The Hill.


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