James Setterlund

ATR Submits Comments on FHFA’s Capital Rule

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Posted by James Setterlund on Wednesday, September 9th, 2020, 12:38 PM PERMALINK

Last week, Americans for Tax Reform submitted comments to the Federal Housing Finance Agency on its proposed capital requirement rule. This rule sets minimum capitalization levels for Fannie Mae and Freddie Mac as the FHFA begins the process of ending its conservatorship of the Enterprises. Ending conservatorship will help remove the explicit burden of loss from the taxpayer, which can only be done by ensuring the Enterprises build up sufficient capital levels to protect against an economic downturn.

ATR broadly applauds the Agency’s leverage ratio requirement as well as the inclusion of credit risk transfers in the proposed framework. We believe the rule’s direction to raise the leverage ratio ensures the Enterprises will be able to cover potential losses from underlying mortgages in the event of a market downturn and acts in support of more technical risk-based requirements that are subject to error. The leverage ratio, in contrast to risk-based requirements, acts as a broad-based hedge of risk and ensures the Agency fulfills its mission to withstand housing market downturns and give countercyclical support to the mortgage market. That is, strength when the broader economy and housing market is weak.

ATR emphasized the need to incrementally step-up capital requirements like the leverage ratio slowly, rather than rapidly as suggested in the proposed rule. Structuring an onramp would give the Enterprises necessary time to phase in changes and help preserve the CRT market, which is also an essential countercyclical balance for the Enterprises. The CRT market has become a central mode through which the Enterprises manage the risk it assumes in the mortgage market. We advise against requirements to curb CRT in order to support the continued stability of the Enterprises.

CRT effectively serves as a buffer to protect taxpayers from the underlying risks of the mortgage market by selling credit risk to private capital markets and reinsurers. This shrinks the extent to which the Enterprises can suffer losses on mortgage defaults and places private capital in front of taxpayer liabilities in the event of a market downturn. By issuing CRT, the Enterprises limit their risk levels as they continue to take on mortgage risk, serving both their mission to foster a strong mortgage market and limit the exposure to the taxpayer from needing to bailout the Enterprises again.

While the success of the CRT program within conservatorship for both Enterprises and market participants is indisputable, the path toward independence must still include capital buffers and ratio requirements. Maintaining support of the rule and cognizance of CRTs’ benefit, ATR indicated its wish to see the FHFA study the economic impact of the CRT market before definitively deciding to curb its use, as any increase in capital requirements would necessitate. Preserving the CRT market is vital to any finalized capital requirements rule.

Read the full letter here.

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ATR Leads Coalition Encouraging SEC to Review Quarterly Reporting

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Posted by James Setterlund on Tuesday, October 27th, 2020, 3:24 PM PERMALINK

Under the leadership of Chairman Jay Clayton, the Securities and Exchange Commission has taken a tactful approach to review regulations and statutes for their efficiency in a marketplace that is constantly evolving, innovating and incorporating new technologies to help investors successfully plan for their long-term interests. At the heart of many of Chairman Clayton’s initiatives has been reducing regulatory barriers and encourage more private companies and retail investors to seek the capital markets. 

On Dec. 28, 2018, the SEC published an advance notice on proposed rulemaking in the Federal Register to request public input on how best to balance investor protection and the need for quarterly disclosure of financial reporting. This comes on the heels of President Trump asking SEC Chairman Jay Clayton to review the process, of which the SEC agreed to continue to “study public company reporting requirements, including the frequency of reporting.”

Specially, the solicitation of comments asks investors and businesses alike to evaluate the need for multiple disclosures of quarterly filings, known as Form 10-Q, in conjunction with yearly financial disclosures on Form 10-K and earnings reports on Form 8-K. Among the multiple businesses and investors who provided comments, there is support for the SEC to review and consider adopting new reporting guidelines that would amend the current quarterly standard and adopt a tri-annual, or even a biannual reporting structure.

As some of the comments submitted to the SEC suggest, switching from quarterly to tri-annual, or even a biannual reporting basis, could help promote long-term investing, instead of a “short-termism” trading mentality. Proponents of the proposal note that shifting to a model that decreases the reporting frequency will save costs for public companies, particularly small cap companies, as the reports are time consuming, expensive, and repetitive as there are already multiple other forms of reporting to the SEC. Those opposed to shifting to a less-frequent reporting system believe that the lack of quarterly reports leaves investors in the dark and lacks transparency for disclosing company performance. However, as has been the case particularly among technology businesses have operated at a loss for multiple quarters or years after going public and using their earned capital to reinvest back into the business before turning a profit. Had some investors purely relied on Form 10-Q reporting, discounted the products or services made and the business’s management team, these investors could have been left out of valuable growth opportunities.

Since the healthcare crisis created uncertainty beginning in March, over 850 companies have pulled quarterly guidance, as noted by CNBC. Because of the uncertainty surrounded by the crisis, investors actually have not punished companies for not providing guidance during Q2 and Q3 of this year, with many companies opting not to providing guidance for a full year. For example, only 67 of the S&P 500 companies have resumed guidance. With this lack of guidance and the market returning to near pre-COVID levels, it has some institutional investors supporting the idea to eliminate the trend of quarterly guidance to encourage more long-term investment in the market as well.

Americans for Tax Reform lead the coalition letter encouraging the SEC to ease compliance burdens on public companies and promote policies to that encourage shareholders to invest for the long-term by moving toward tri-annual reporting and reviewing guidance structures.

Click here to review our letter.

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ATR & SAF Supports Second Term for SEC Commissioner Hester Peirce

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Posted by James Setterlund on Monday, July 6th, 2020, 9:47 AM PERMALINK

Shareholder Advocacy Forum Executive Director James Setterlund and Americans for Tax Reform President Grover Norquist sent a letter to the Senate Banking, Housing, and Urban Affairs Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) expressing support for the re-appointment of Securities and Exchange Commissioner Hester Peirce to serve a second-term at the Commission.

President Trump nominated Peirce for her second term as a Commissioner of the SEC in early June. Her current term was set to expire on June 5, but the nomination has added 18 months for the Senate to review and vote to confirm. Commissioner Peirce could serve for at least five more years at the SEC depending on her confirmation before the full Senate. 

Commissioner Peirce has a proven track record as one of the most forward thinking and pro-modernization Commissioners the last decade. Her policies represent a commitment to the SECs core tenants of investor protection, facilitating capital formation, and maintaining efficient markets, without burdening the market with expensive and unfair regulations. Commissioner Peirce has encouraged market functionality without transforming the SEC into a government regulator that stifles innovation before new financial products are created.

Commissioner Peirce is known for her willingness to openly engage in dialogue with the investing public. Whether it be about tailoring crypto currency regulations to better serve the market, or supporting capital formation in the private market – Commissioner Peirce cares about feedback from all market participants regardless of the size of their investments in the market. She raises questions that probe investors and issuers, while encouraging forward-thinking comments.

President Trump has recognized the impact of Commissioner Peirce’s contribution to the SEC and the market. Peirce was quoted in February “I certainly do not feel done with that I want to do at the SEC.” Commissioner Peirce is an invaluable asset to the SEC and the investing public.

A full copy of the letter can be found here.

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SCOTUS Curbs Administrative Autonomy of CFPB

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Posted by James Setterlund on Monday, July 6th, 2020, 8:21 AM PERMALINK

On Monday June 29, the U.S. Supreme Court ruled 5-4 that the Consumer Financial Protection Bureau’s current structure is unconstitutional, slightly curbing the autonomy the agency has enjoyed since its inception. It’s creation under Title X  of the Dodd-Frank Act, the CFPB is led by a single director who – until the Supreme Court’s ruling – could not be removed from their five-year without cause for termination. The Court found this to be in violation of the Constitution’s separation of powers, and instead insisted the bureau head be removable at the discretion of the executive branch. 

Congress created the CFPB in the wake of the 2008 financial crisis to police financial institutions for their alleged wrong-doing as it relates to consumer debt and financial products. By its organizational structure, the regulator was designed to be totally independent of the executive branch and oversight from Congress. The authors of Dodd-Frank, who followed the template of then-Harvard law professor, Elizabeth Warren, purposefully designed the Bureau to be shield from Congressional oversight. The Director of the Bureau serves a five-year-term and can only be fired for-cause, instead of at-will, which is why the leadership at most federal regulators turn over when a new administration enters the executive branch. Prior to the Court’s ruling, the Director of the CFPB could serve out their complete 5-year term regardless if a new administration entered office, and how President Obama’s appointee Richard Cordray was able to remain as Director for nearly a year into President Trump’s term and only left his position early to pursue an Ohio Governorship run in November 2017.

Chief Justice John Roberts led the court’s majority, stating plainly the single-administrator organization “clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control.” The Court’s decision requires the agency head to be removable at will, and not for-cause under Dodd-Frank’s requirement of “inefficiency, neglect of duty, or malfeasance in office” alone. That is the only change that comes out of this decision.

Like with other financial regulatory agencies, the term length and other factors that give the Bureau independence were not struck down in the Court’s ruling. The Court cited the lack of a board or commission structure like that of the Securities and Exchange Commission or the Federal Reserve and the Bureau’s independence of its budget from the Congressional appropriation process as the main reasons the CFPB is too insulated from the arms of elected officials. This is a meaningful victory to for the Constitution and its separation of powers provision.

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ATR Opposes H.R. 5332, The Protecting Your Credit Score Act

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Posted by James Setterlund on Tuesday, June 30th, 2020, 4:26 PM PERMALINK

Americans for Tax Reform President Grover Norquist on Monday sent a letter to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.) expressing opposition to Rep. Josh Gottheimer’s (D-N.J.) H.R. 5332, the Protecting Your Credit Score Act of 2019. Despite attempts to frame the bill as a set of protections for consumers, its core provisions would actually work against the interests of borrowers if enacted. Essentially, it would expand the power of the Consumer Financial Protection Bureau while benefitting trial attorneys and create opportunities for cyber theft of consumer information by providing complete Social Security numbers.

H.R. 5332 gives the CFPB the power to direct the credit reporting agencies when to audit consumer reports and oversee the creation and maintenance of a designated website consumers can use to view available credit information all in one place. Additionally, the bill creates a new office under the establishment of an ombudsman within the CFPB to oversee all consumer complaints against credit reporting agencies. This person would have outsized enforcement power to oversee the credit reporting industry, including regulatory and disciplinary autonomy, with little accountability.

The Act opens the door for expanded litigation and encourages superfluous legal challenges through its injunctive relief provision. Businesses could expect to see an influx of challenges to credit report information as the designated website would erase negative but accurate information on a borrower’s credit history from being included in credit reports. The abuse of the tool will open the door to a surge of lawsuits to correct the record that will be far more lucrative to attorneys than helpful in protecting consumers and businesses. The cost of litigation resulting from H.R. 5332 would result in increased costs to produce credit reports that will be paid by consumers.  

Additionally, the bill requires credit reporting agencies to use consumers’ full Social Security numbers in reports against the current practice of only using the last four numbers. By itself this would expose consumers and companies to increased risk of cyber theft, but the problem is intensified with H.R. 5332. The designated website would be built by credit reporting agencies but owned and overseen by neither the agencies nor the CFPB. The website will contain the information of every consumer and serve as a prime target for bad actors seeking to access Social Security numbers in which additional financial products can be created using customers names but without their knowledge.

Though Gottheimer and others sought to protect consumers’ credit scores by increasing transparency in credit reporting, the consequence of their proposals will inevitably lead to the opposite. H.R. 5332 passed out of the House Financial Services Committee on a partisan vote of 31-24 with all Committee Democrats supporting the bill. It passed the House with a vote of 234-179 but faces opposition in the Senate.

Read the full letter here.

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ATR Supports the Community Bank Regulatory Relief Act

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Posted by James Setterlund on Wednesday, June 17th, 2020, 2:43 PM PERMALINK

Americans for Tax Reform President Grover Norquist sent a letter to Senators Kevin Cramer (R-N.D.), Tom Cotton (R-Ark.), Jerry Moran (R-Kan.), and Thom Tillis (R-N.C.) expressing support for their legislation, the Community Bank Regulatory Relief Act. S. 3502 will reduce regulatory barriers to help community banks lend additional capital to their Main Street customers during the healthcare emergency.

The COVID-19 pandemic continues to negatively impact the economy and community banks are particularly vulnerable. Senator Tillis has commented that the legislation will provide “regulatory relief to those financial institutions and allow them to play an important role in our economic recovery.” S. 3502 has two commonsense changes that will aid community banks in sustaining operations.

First, the Act lowers the community bank leverage ratio – a ratio of capital to unweighted assets – from 9% to 8%. A lower CBLR requirement will allow community banks to maintain their status while freeing up resources to meet customers financial needs quickly during uncertain times. This will amendment to Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, passed by President Trump in 2018 and supported by ATR. Banks that opt-in to the CBLR metric and meet the ratio requirement are considered “well capitalized” for prompt corrective action purposes, a status that is extremely important in times of economic uncertainty.

Second, the act delays implementation of the Current Expected Credit Loss accounting standards until December 2024. CECL directs banks to set aside lifetime loss reserves at the time of loan origination – as opposed to a marker of when loss appears probable under current GAAP standards. This requires banks to make predictions about the future in the middle of increasingly uncertain times.

Implementing CECL is cumbersome and expensive. Community banks are far behind larger banks with more resources to devote to compliance. As the size of assets held by a bank decreases, the cost of regulatory compliance increase. Tailored regulatory relief like S. 3502 will be helpful to community banks, and this delay of CECL would allow Main Street banks to lend more funds to consumers in need.  

There has been much pushback and opposition from the banking industry and members of Congress against CECL since the standard was passed in 2016, with an almost immediate proposal from the Financial Standards Accounting Board. Traditionally, FASB set an effective date for SEC reporting companies and other public businesses while affording an extra year for private companies, small businesses and nonprofits to come into compliance with their new accounting standards. The CECL proposal was open for public comment until September 16, 2019 – however, no decision was made before the escalation of the coronavirus pandemic about further delaying the compliance deadline for smaller institutions.

We applaud Senators Cramer, Cotton, Moran, and Tillis for introducing the Community Bank Regulatory Relief Act and recognizing the reducing regulatory barriers for our nation’s community banks during the healthcare emergency. We also thank Senators Tim Scott (R-S.C.) and Kelly Loeffler (R-Ga) for supporting S. 3502 to help our Main Street institutions can continue to lend to the community.

The full letter can be found here.

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ATR Proposes Solutions to Jumpstart the Economy and Create Jobs

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Posted by James Setterlund on Wednesday, May 20th, 2020, 3:57 PM PERMALINK

Americans for Tax Reform sent a letter to the Chairman Mike Crapo (R-Idaho) and Ranking member Sherrod Brown (D-Ohio) of the Senate Banking, Housing and Urban Affairs Committee urging members to consider policy proposals that will further stimulate economic growth beyond government assistance in the form of loans and grants to business and Americans.

Last week, House Democrats led by House Speaker Nancy Pelosi (D-Calif.), unveiled a roughly $3 trillion bill to combat the effects of the healthcare emergency. Much of the news coverage has been favorable of the legislation and has been highlighted as a victory for healthcare workers and providing more funding for more COVID-19 testing. But Pelosi is pushing a bill that follows her previous playbook of using the emergency as an opportunity to advance progressive priorities that have nothing to do with the protecting Americans’ health.

In fact, Pelosi’s “Health and Economic Recovery Omnibus Emergency Solutions Act’’ or ‘‘HEROES Act’’ includes similar provisions that were left out of her version of the “Take Responsibility for Workers and Families Act” – the precursor bill she used to negotiate with the Senate before both chambers finalized the Coronavirus Aid, Relief and Economic Security Act, otherwise known as the CARES Act that was signed into law by President Trump on March 27th.

Included in the Pelosi proposal is a $25 billion-dollar bailout for the US Postal Service and a rewriting of election law to permit voting by mail while ignoring the multiple documented cases of fraud and abuse of mail-in voting. Pelosi plans to move the legislation quickly for a vote in the House and use the bill’s passage as a negotiating point with the Senate. Senate Majority Leader Mitch McConnell (R-Ky) has already indicated that the Senate does not yet see the need to move another multi-trillion dollar relief bill, and if there is a need, the push for Senate legislation will occur in June.

While McConnell is willing to consider fiscal restraint before another large spending bill, Congress should also consider legislative proposals that will rapidly spur economic growth. As several relief focused legislative packages have been enacted with broad bipartisan backing to provide support for Americans, state and federal regulators have played an important role in alleviating businesses from burdensome regulations that have allowed their operations to swiftly respond and innovate to meet the demands of the public.

Several states and cities are also taking a tiered approach of introducing small steps to allow some businesses to re-open for commerce. This provides a unique opportunity to codify pro-growth regulatory initiatives and for Congress to consider policies that will help jump-start the economy and allow businesses of all sizes the flexibility to meet the needs of customers, taxpayers and the general public for years to come.

Once the emergency of COVID-19 has subsided, Congress will play an important role in considering legislation that helps Americans return to their jobs and their roles in the community. As such, it is important to preserve or enact policy solutions that help ensure our nation’s financial institutions can continue function properly and provide the economic certainty and fulfillment Americans need to reenter a labor market ready to re-open.

Click here to review our letter.

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ATR Signs Coalition Letter Opposing any Legislation that Would Alter the Credit Reporting Process

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Posted by James Setterlund on Tuesday, May 12th, 2020, 4:39 PM PERMALINK

Americans for Tax Reform joined a coalition of free-market organizations, led by the National Taxpayers Union, to oppose any congressional effort to suppress credit reporting information in future COVID-19 legislative relief packages.

On March 27, President Trump signed the Coronavirus Aid, Relief and Economic Security Act, otherwise known as the CARES Act, which provided over $2 trillion in relief to Americans and businesses. The bill started as a Senate product under the leadership of Senate Majority Leader Mitch McConnell (R-Ky), before reaching a compromise with the House of Representatives’ legislative product. Before House Speaker Nancy Pelosi (D-Calif) agreed to use McConnell’s legislation to build upon, House Democrats were working on a “relief” bill disguised as a wish-list filled with progressive priorities.

The Pelosi alternative Phase 3 bill, the “Take Responsibility for Workers and Families Act” includes various provisions, such as: investing $35 million on the Kennedy Center and $200 million to require airlines to purchase costly “renewable” jet fuel. Also incorporated into Pelosi’s legislation was the Chairwoman of the Financial Services Committee, Maxine Waters’ (D-Calif), draft legislation that mirrors the Speaker’s Christmas-tree approach of using the healthcare emergency to pass progressive-agenda items. Included in the Speaker’s final draft was a provision that would have prohibited negative consumer information from being included on an individual’s credit score and a moratorium on lenders furnishing adverse information.

Credit reports identify a barrowers payment history, debts incurred and paid, and other financial information that combine to produce a customer’s credit score. The score is a risk indicator for lenders to use and help determine a borrower’s ability to repay a lender, and also impacts the interest rates borrowers pay on a loan or credit card. By proposing to reduce the accuracy of information associated with credit reports, Democrats are effectively punishing borrowers who need access to credit now more than ever in this health emergency, and lenders who will be unable to appropriately measure a barrowers credit standing. During the financial crisis of 2008, it was revealed that excessive loans were made to borrows who had more house than they could afford, which could happen again if progressive ideas move forward into legislation.

Less accurate credit reports can reduce the amount of credit extended or lead to increased interest rates as lenders will become even more cautious when analyzing reports for authenticity. For borrowers, Democrat’s proposals to suppress negative information will create unintended consequences by increasing the cost of credit to account for ambiguity of positive and negative information comprised in the credit score. It can be expected that the unintended consequences will directly impact unbanked and underbanked Americans most.

The current period of economic uncertainty calls for a federal response to be targeted in its efforts to provide immediate relief to assist millions of Americans and small businesses. Congress should not use any relief legislation as an opportunity to advance pet priorities that have nothing to do with directly benefiting Americans. 

Click here to review the letter.

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Consumers Need Certainty, It Is Time to Withdraw Obama-era Judgements

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Posted by James Setterlund on Wednesday, April 29th, 2020, 12:25 PM PERMALINK

Director of the Consumer Financial Protection Bureau and Trump appointee, Kathy Kraninger, has been leading the financial regulator for over a year and has done an impeccable job reversing Obama-era regulations that hindered innovation and increased the cost to obtain credit for consumers across the US. However, a consent decree entered into by the Bureau’s founding Director on his way out the door remains a hold-over headache that has punished student loan borrowers who rely on private loans and investors who purchased these securitized products as a tool to diversify their retirement portfolio. 

In September 2017, the CFPB under Obama-appointed Director, Richard Cordray, entered into a consent decree with the National Collegiate Student Loan Trusts and their loan servicer, Transworld Systems, Inc. as one of his last enforcement actions before leaving the Bureau. The 15 Trusts held $12 billion in private loans for 800,000 borrowers, of the which the loans were securitized and sold to investors. Typically, investors holding these securitized financial products include pension and retirement plans.

Concerningly, the Bureau appears to have intentionally defined or inappropriately misinterpreted the Trusts as debit collectors under the “covered persons” provision of Dodd-Frank. In Section 1024 of the Dodd-Frank Act, the Act refers to “covered persons” primarily as businesses dealing in real estate loan origination, offer and servicing and “a larger participant of a market for other consumer financial products and services.”

It would appear that former Director Cordray exceeded his authority by capturing Trust investors in the Bureau’s consent decree. The erroneous categorization of the Trusts as “covered persons” allowed the Bureau to deem Transworld Systems, acting as a servicer, as an “affiliate” within the statutory definition of Dodd-Frank. Subsequently, Trust investors have been apprehended in the Bureau’s ruling and have seen the gains forfeited because of Cordray’s actions.

Representatives Zeldin, Budd and Duffy raised these concerns in a letter to Director Kraninger how Cordray’s order  “penalize[s] innocent actors, including pensions plans, retirement plans, and by extension the consumers that have entrusted their savings to them, for a third party's alleged misconduct.” As a result, the private student loan market can expect credit to constrict or become more expensive to access, and investors who utilize this product to diversify their retirement portfolio may see these investment opportunities vanish from the market. Creating certainty for investors and market participants is more important now to help stabilize the securitization market and should be consider with urgency. Director Kraninger should continue her pro-growth agenda by withdrawing the Obama-era consent decree.

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ATR Signs Coalition Letter to Prevent Expansion of the Durbin Amendment

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Posted by James Setterlund on Monday, April 27th, 2020, 11:27 AM PERMALINK

Americans for Tax Reform joined a broad coalition of free market organizations to oppose any effort by Congress to exploit the Covid-19 healthcare emergency to further expand Dodd-Frank-era price controls. The coalition letter led by Competitive Enterprise Institute implores Congress to refrain from using the emergency as an excuse to expand Dodd-Frank’s Durbin Amendment to cap interchange fees on credit cards, as the Amendment has already done so for debit cards.

The Durbin Amendment was a last-minute addition on the Dodd-Frank Wallstreet Reform and Consumer Protection Act, and installed routing mandates and a cap on debit card interchange fees. Interchange fees are charged at the point of sale by banks and credit unions on debit and credit cards transactions. These fees help fund software and hardware systems that ensure secure transactions and help protect customers from card fraud.             

Named after Illinois Senator Dick Durbin, the Amendment instructed the Federal Reserve to cap the amount which payment companies and banks with over $10 billion in assets can charge merchants and retailers for debit card purchases. These fees are currently capped at roughly 21 – 23 cents per-charge.

Prior to the Durbin Amendment, merchants would be charged around 1 percent per-transaction. For example, a retailer selling a smartphone for $300 would pay a $3 fee to the bank as a small insurance policy to counteract the risk of fraud or overdrafts from the consumer. As noted by the Competitive Enterprise Institute, the average swipe fee was 44 cents per transaction.

Merchants and retailers that supported the Amendment promised savings would be passed onto consumers in the form of reduced prices in stores. A May 2017, the Congressional Research Service report stated, “Merchants that were paying fees above the regulated interchange fee had expected to benefit from the rule. Evidence from a 2015 study, however, suggests that the regulation has had a limited and unequal impact in terms of reducing merchants’ costs.”

A 2015 study by the Richmond Federal Reserve has shown that most big-box retailers like Target and Walgreens have failed to pass these savings on to the consumer by lowering the cost of items. A 2017 International Center for Law and Economics report found that large retailers saved an estimated $40 billion for their bottom line, while customers did not see a reduction in price of goods.

Consumers are paying more at the bank counter as well through increased banking fees. According the Boston Federal Reserve, the Durbin Amendment has cost large banks nearly “$14 billion a year or more than 5 percent of core total noninterest income.” To recover their annual revenue losses, banks eliminated debit card reward programs, installed high fees on minimum deposit accounts that grew from $109.28 in 2008 to $670.74 in 2016, and charged high monthly maintenance charges on accounts which climbed from $5.90 in 2009 to $13.25 in 2017. Additionally, the number of free checking accounts fell from 60 percent in 2009 to 20 percent as of January 2019. Finally, according to Federal Reserve research, 1-in-4 small banks currently lose money on each debit transaction, explaining many of these consequences.

The decreased availability of free checking accounts and accounts with no minimum balance have hurt America’s most vulnerable consumers. Since the enactment of the Amendment, debit card adoption from lower-income households (less than $25,000 per year) dropped by roughly 10 percentage points relative to households earning between $50,000 and $75,000 annually. Instead of helping America’s consumers, the Durbin Amendment has increased the number of unbanked Americans.

In the most recent relief legislation, House Democrats delayed the legislation from moving forward by insisting many of their green energy provisions and increased funding for performance arts were included in the bill before the House would vote on the legislation. Congress should not use any relief legislation as opportunity to advance pet priorities that have nothing to do with directly benefiting Americans. 

Click here to review the letter.

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