Texas Border Business
WASHINGTON, D.C. – U.S. Sens. Ted Cruz (R-Texas) and Katie Britt (R-Ala.) introduced the Community Bank Relief Act. The legislation raises the current $10 billion asset threshold that caps debit card fees for banks and index annually to inflation.
Sen. Cruz said, “The Durbin Amendment was not designed for the current economic and regulatory reality and subjects community banks to fee limits that the original language intended for much larger institutions. My legislation modernizes the interchange fee cap to reflect inflation, helping small banks support local economies while lowering banking costs for Americans.”
Sen. Britt said, “As we’ve seen in so many instances, countless regulations in the Dodd-Frank Act were not only onerous but set fixed thresholds that have become outdated over time, and the Durbin Amendment is no exception. The largest burden is on our smallest financial institutions who provide vital sources of credit to Main Streets that drive our local economies. This commonsense legislation would simply index, to both inflation and COLA, the outdated threshold in this provision of Dodd-Frank, ultimately providing relief for our community banks who were never intended to be burdened by this regulation.”
Companion legislation was introduced in the House by Rep. Andy Barr (R-KY-6).
Rep. Barr said, “The Durbin Amendment was sold as a win for consumers in the Dodd-Frank Act by Democrats. Instead, it’s hurt Kentucky’s community banks and credit unions that do so much for underserved communities by limiting their ability to grow and compete with larger financial institutions. I’m working with Senator Cruz to fix this — because Washington shouldn’t be picking winners and losers at the expense of our local banks and the families they serve.”
This bill is supported by Americans for Tax Reform, Independent Bankers Association of Texas, and the Texas Bankers Association.
Americans for Tax Reform President Grover Norquist said, “Indexing the Durbin exemption cap to inflation prevents government price controls from expanding by default. Price controls on interchange were a mistake from the start. They have raised costs for cardholders, reduced benefits, and entrenched government interference in the payments market. Senator Cruz should be commended for his bill to fix the harms caused by Dodd-Frank.”
Texas Bankers Association President and CEO Chris Furlow said, “The success of the nation’s economy depends on healthy community banks that provide capital and critical financial resources for small businesses and families. We thank Sen. Cruz for the Community Bank Relief Act that will right-size regulation and help strengthen the ability of community banks to bolster local economies in Texas and across America.”
Independent Bankers Association of Texas President and CEO Christopher Willston said, “Indexing the Durbin threshold to inflation is a smart, targeted update that keeps community banks where Congress intended—outside the regulatory regime meant for the largest players. By directing the Federal Reserve to make both the initial catch-up adjustment and annual CPI updates, this amendment brings needed certainty and proportionality to the payments system. We appreciate Senators Cruz and Britt for their thoughtful leadership.”
Click here to read the full bill text.
BACKGROUND:
The Durbin amendment to the Dodd–Frank Act, enacted in 2010, authorized the Federal Reserve to cap debit card interchange fees charged by large card issuers and limits transaction fees for debit card purchases by capping fees at 21 cents plus 0.05% of the transaction for banks with assets of $10 billion or more. Currently, the cap stands at roughly 22 cents per transaction.
When Dodd-Frank passed, roughly 80 banks exceeded the $10 billion threshold. Today, roughly 130 banks have exceeded the $10 billion threshold, bringing a larger share of the banking sector under the fee cap that was unintentionally captured under the existing limit.
The Community Bank Relief Act raises the $10 billion asset threshold for covered bank issuers and ties it to an annual cost-of-living adjustment measured by the Consumer Price Index (CPI) to enable more community banks to remain exempt from the Durbin restrictions, allowing them to strengthen their financial flexibility and ultimately reduce costs for American families.
