John Berlau has a must read piece today over at OpenMarket.org on delaying the Dodd-Frank price controls on banks.
In voting this afternoon on a one-year delay of the Durbin Amendment and study of its effects on consumers and small banks and credit unions, sponsored by Sen. Jon Tester (D-Mont.) with Republican such as Sen. Jon Kyl (R-Ariz.) signing on, the Senate also has the opportunity to save the retail industry from shooting itself in it collective foot with its massive but short-sighted lobbying effort to keep these price controls in place. With the Durbin Amendment mandating below-cost price caps of no more than 12 cents for the interchange fee, or swipe fee a merchant groups call it, that banks will be able to charge retailers to process debit card transactions, Washington has — in the words of syndicated columnist Deroy Murdock — “declared war on debit cards.”But even though this war was instigated by big merchants such as Wal-Mart, Walgreens and Home Depot and retail trade association such as the Retail Industry Leaders Association and Food Marketing Institute, retailers themselves are going to be among the casualties of this war as the debit card system slows down and even breaks down due to the ill-effects of the Durbin price controls. New developments show that both consumers and retailers, particularly smaller ones, will lose.
Banks are going to find a way to make money. And as Congress complicates their path to making money, like water flowing through and around barriers, it’ll get messier and messier for us, but the banks will make money. It is what they do.In the process of complicating the world of banking, banks will respond in ways that hurt you and me because of it.The most unforeseeable consequences are the most obvious ones like this.