ABA President and CEO Frank Keating refuted Sen. Dick Durbin’s (D-Ill.) claims that his regulations on interchange fees are "reasonable constraints" for the financial industry.
“Price controls are an anathema to free market principles, and what Sen. Durbin describes as ‘reasonable constraints’ will mean a 45 percent loss in revenue banks use to provide low cost accounts, fight fraud and maintain the U.S. payments system,” Keating wrote in a letter to the Wall Street Journal, ABA.com reports.
Durbin submitted an earlier letter to the WSJ defending his debit interchange price control law, known as the Durbin Amendment, after the Wall Street Journal printed a scathing editorial about the rule’s harmful impact on American jobs.
“Contrary to Sen. Durbin's beliefs, your Sept. 13 editorial ‘The Dodd-Frank Layoffs’ gets it right,” Keating wrote in his letter, according to ABA.com. “This direct transfer of costs from big box retailers to everyday Americans will result in higher fees for basic banking services, and threatens our nation's community banks.
Keating made the common argument among many Durbin Amendment opponents that merchants will not pass their new savings onto customers.
“The real question is: Will retailers reward customers with lower prices from their billion dollar windfall or will they simply pocket the money?” Keating wrote, according to the Wall Street Journal. “I think we already know the answer.”