Dear Editor:
The Dodd-Frank Wall Street Reform Act was supposed to reign in those on Wall Street who created the financial crisis. Instead, it hurts Main Street financial institutions like River Region Credit Union and the members we serve. One amendment in the Dodd-Frank Act - the Durbin amendment - was never meant to impact our local financial institutions and consumers. But it has.
With the Durbin Amendment, big box store lobbyists promised Congress that retailers would pass along savings to their customers in the form of lower prices if Congress placed price controls on debit interchange fees. Interchange fees are paid by retailers so they can accept debit and credit cards from their customers. Credit unions and banks use interchange fees to maintain the complicated global payments network that allows customers the convenience of using cards versus cash or checks. Without any hearings or studies, the Durbin amendment was passed despite the fact that interchange fees had nothing to do with the financial meltdown of 2008.
Fast forward six years, and multiple studies show the Durbin amendment has been a failure. Credit unions and their members are among those hurting the most from this one-sided special interest bill. Financial institutions with less than $10 billion in assets were supposed to be exempt from the Durbin amendment's price controls but the exemption has not worked. In fact, a study by the Credit Union National Association found an estimated negative impact of $1.1 billion for credit unions due specifically to the Durbin amendment. That's money spent on regulations and compliance that credit unions cannot use to benefit their members and the local economy.
Retailers haven't kept their promise of passing along the savings to customers. A study by the Federal Reserve of Richmond found 22 percent of merchants actually increased, not decreased, their prices. That means big box corporations have pocketed $42 BILLION since the Durbin Amendment was implemented - all while local credit unions suffer under the burden.
As a financial cooperative owned by the people who use our services, River Region Credit Union wants to do more for consumers. But the Durbin amendment's economic and administrative burdens impacts the ability of all credit unions to do more, and that hurts consumers both here in Missouri and across the country.
It is high time for this failed policy to be repealed.
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