If we had a “Dim Bulb of the Year” award, we would give it to Sen. Dick Durbin, D-Ill. How better to honor someone who so ostentatiously proposes a policy with obvious unintended consequences, then gets angry when they predictably come to pass? During the debate over the Dodd-Frank financial reform bill, when Democrats controlled Congress, Durbin insisted on including an amendment that had nothing to do with Dodd-Frank’s stated aims of stable banks and consumer protections. The Durbin amendment granted regulators the authority to establish price controls on what banks could charge merchants that accepted their customers’ debit cards as payment. The resulting regulations, which took effect Oct. 1, limit what banks can charge merchants to no more than 24 cents per debit card transaction.
Critics pointed out that banks, facing $6 billion annual losses from this change, would shift the costs of debit cards from merchants to bank customers. Sure enough, Bank of America and several of its largest competitors — including Wells Fargo, PNC, HSBC, SunTrust, TDBank, and Chase — will be imposing various new fees on their customers to make up for Durbin’s folly.
