Legislation to repeal the federal cap on debit card fees was introduced Tuesday in the House.
Rep. Randy Neugebauer, R-Texas, the author of the legislation, said in introducing his bill that the cap on swipe fees “represents an egregious example of the federal government picking winners and losers. Simply put, it represents crony capitalism at its worst.”
Neugebauer’s bill would repeal the section of the 2010 Dodd-Frank law authored by Democratic Sen. Dick Durbin of Illinois that required the Federal Reserve to set a cap on fees charged by card issuers on transactions.
The provision was meant to lower prices for consumers and spare retailers from card fees, but critics say the promised savings have not materialized.
Bank groups immediately lined up behind Neugebauer’s legislation Tuesday afternoon. The Electronic Payments Coalition, representing all the major bank trade groups, sent a letter of support for the bill, writing that “the bottom line is this amendment introduced price-fixing to a formerly functional and competitive marketplace and failed to keep the dubious promises made to sell it — ultimately hurting customers.”
Neugebauer charged that the rule simply transferred billions from one industry to another, and that it is “nothing more than a government action to manipulate the marketplace.”
His bill will be a candidate for inclusion in the Dodd-Frank alternative prepared by the Republican House Financial Services Committee. The committee’s chairman, Jeb Hensarling of Texas, called the Durbin Amendment “price controls” and said that his alternative would repeal it.
Neugebauer, the chairman of the Financial Institutions and Consumer Credit subcommittee, has announced that he will not seek re-election this year. Republicans are counting on a Republican president in 2017 if their Dodd-Frank replacement is to become law.
