Jeb Hensarling’s big bank bonanza bill

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Rep. Jeb Hensarling’s (R-Texas) Financial CHOICE Act, which is scheduled for action this week in the House Financial Services Committee, would be the largest gift to the banking industry since the big bank bailout of 2008. 

The bill’s 500 pages are stuffed full of provisions that would benefit Wall Street banks at the expense of Main Street America. The bill would gut consumer protections and unleash the same cutthroat, predatory financial forces that ruined the livelihoods of countless families and small businesses and caused the Great Recession. 

It’s tough to even count all the bank industry giveaways tucked into this massive legislation. 

{mosads}The act would roll back dozens of safeguards that were put in place to stop the reckless big bank schemes responsible for the financial meltdown. 

It would repeal the Volcker Rule that prevents banks from gambling with customers’ money. 

It would cripple the Consumer Financial Protection Bureau, just days after the CFPB caught and fined another big bank, Wells Fargo, $100 million for outrageous predatory practices. 

And, to top it off, the bill would dramatically increase debit card swipe fees and have merchants and their customers pay an estimated $8 billion per year windfall to the nation’s biggest banks. 

The swipe fee reform law that Congress enacted in 2010 was a huge step forward in bringing transparency, competition and choice to a debit card system that had been rigged by Visa, MasterCard and the banks. 

This law put reasonable limits on the debit fee price-fixing that Visa and MasterCard performed on behalf of big banks. It also put an end to Visa and MasterCard’s anticompetitive habit of paying incentives to banks to block other debit card networks from handling the banks’ debit transactions. These important reforms have enhanced market competition and incentivized greater efficiency and security in electronic payments. 

Since the enactment of swipe fee reform, debit swipe fees have been reduced by an estimated $8 billion per year, helping small businesses hold down prices for their customers and hire more employees. 

Consumers have benefited as retailers compete to pass along savings, with noted economist Robert Shapiro estimating the reform saved consumers about $6 billion in 2012. 

Small banks and credit unions have been able to win customers away from big banks, with the Federal Reserve reporting that the small issuer exemption from fee regulation under the Durbin Amendment “is working as intended.” 

And free checking is still widely available, with the American Bankers Association reporting in 2015 that “the majority of Americans — 61 percent — pay nothing at all for bank services” — an increase from the 53 percent the ABA reported had free checking in 2010. 

There’s no question that this law is paying dividends for Main Street America. 

Hensarling’s repeal of swipe fee reform would be like imposing an $8 billion per year tax increase on Main Street merchants, with the money going to banks like Wells Fargo. This would be a sweetheart deal for bank CEOs but a raw deal for Main Street. Consumers would ultimately suffer the most, since they pay the cost of swipe fees in the form of higher retail prices at the checkout counter and at the gas pump.

Hensarling seems to think Americans aren’t paying enough in debit card fees and should pay more. He’s asking his fellow committee members to turn their backs on Main Street families and small businesses in favor of his big bank bonanza bill. 

American businesses and consumers deserve a debit card system with competition, transparency and reasonable fees. The better choice would be to keep these critical protections in place and reject this bill. 


Durbin is senior U.S. senator from Illinois, serving since 1997. He sits on the Appropriations, Judiciary and Rules committees and as Senate minority whip.

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