House Republicans are expected to introduce an updated bill reshaping the financial regulatory system, and the prospect has kicked off what could be one of the largest industry-versus-industry lobbying battles ever.
Lobbyists expect the House Financial Services Committee to release a new version of last year’s Financial Choice Act in a matter of weeks. The bill would undo many of the regulations in President Barack Obama’s 2010 Wall Street reform law and touch on almost every aspect of the financial system.
Yet one provision unrelated to the financial crisis promises to generate the biggest lobbying effort on both sides.
The previous version of the bill, introduced last summer, would repeal a cap on debit card swipe fees instituted as part of the 2010 Dodd-Frank law.
Repealing the provision, known as the Durbin Amendment, pits retailers, restaurants, convenience stores and others that process card transactions against banks. Billions of dollars are on the line annually.
A 2011 legislative effort to prevent the cap from being implemented led to a reported $30 million being spent on lobbying by both sides.
When Republicans included the repeal measure in their Dodd-Frank replacement package last year, the controversy over it threatened to overshadow the more ideological aspects of the legislation.
Austen Jensen, the vice president for government affairs for the Retail Industry Leaders Association, a retail trade group, said he expected the updated version of the bill to include the Durbin Amendment repeal and for a “robust effort” to stop it once the legislation clears the Financial Services Committee.
Several lobbyists and members of the committee said that they expect legislation to be introduced in a matter of weeks. The timeline for advancing legislation to pare back bank regulations, which President Trump has said is a priority, may be shortened if congressional Republicans fail to quickly coalesce around legislative approaches for replacing Obamacare and reforming the tax code, two priorities that were previously said to be ahead of replacing Dodd-Frank. In an interview on CNBC Tuesday, committee Chairman Jeb Hensarling, R-Texas, said he doesn’t “really know the answer” to questions about timing for legislation, other than that it “is still a this-year priority” for the administration and Congress.
Retailers, restaurants and others that favor the cap on swipe fees plan to send people to the Capitol on Wednesday to talk to lawmakers and try to sway them against repeal.
On Tuesday, lawmakers received a letter from 900 companies, including 7-Eleven, Walmart and McDonald’s, warning them that repeal of the swipe fee cap would “dismantle the substantial progress debit reforms have made in correcting in part an otherwise non-functioning and non-transparent card acceptance marketplace in the United States.”
A key argument for advocates of the cap on swipe fees will be that the battle pits retailers, restaurants and mom-and-pop stores against a few major card companies and banks, especially big banks. Underlying that argument is the fact that the cap exempts banks with less than $10 billion in assets, a category that includes most small banks.
Yet repeal of the Durbin Amendment is one of the measures in the House GOP bill that banking industry groups say unites banks of all sizes. Other reforms are more controversial among certain bankers. House Republicans’ proposed reform to the Federal Reserve’s monetary policy communications, for instance, is strongly opposed by big banks.
Paul Merski, the executive vice president for congressional relations at the Independent Community Bankers of America, a trade group for community and smaller banks, called it a “fabrication” that small banks didn’t favor repealing the Durbin Amendment. The cap on transaction fees for bigger banks, he said, affected prices throughout the marketplace, including for small banks. “We’re 100 percent in favor” of repealing the Durbin Amendment, he said.
