Advancing a Free Society

The Debit Card Stealth Tax

Tuesday, October 4, 2011

We need to repeal the Durbin Amendment of the Dodd-Frank Act.

October 1, 2011 marked a major watershed in commercial banking, for on that date, the Durbin Amendment, one of the most ill-conceived reforms of the Dodd-Frank Act, went into effect. Senator Dick Durbin (D – Illinois) added his amendment into the act at the last moment without any Senate or House hearing. The reform he implemented will revolutionize retail banking, and for the worse. Stripped to its core, this convoluted provision orders the Federal Reserve Board to institute a set of maximum fees that large banks—defined as those whose assets exceed $10 billion—can charge to their debit-card customers. Prior to the Dodd-Frank Act, these fees averaged about $0.47 on the typical $35 purchase. Small banks can do business as they did before.

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