Durbin doubles down on dubious debit decree

The Dodd-Frank Act’s so-called “Durbin amendment,” passed more than a decade ago in 2010, was supposed to reduce the cost of consumer goods by regulating the price and processing of debit-card transactions.

In practice, it has instead harmed consumers. Banks offset the income they lost from debit-card fees by increasing fees on checking accounts, increasing the minimum deposit required for “free” checking, and eliminating debit rewards programs. Meanwhile, merchants passed on little of the savings they enjoyed.

But that hasn’t stopped Sen. Richard Durbin (D-Ill.) — author of the original provision — from doubling down, introducing a bill that would impose similar regulations on credit cards. The results are predictable. …

The bill’s supporters are clear that their intent is to drive down interchange fees for credit cards, just as the original mandate did for debit cards. We already know the consequences. Annual fees, which today are assessed primarily on cards with rewards and benefits such as frequent flyer miles, will likely return for most cards. Rewards will disappear or become far less generous. And lower-income consumers, who spend less and thus generate less revenue, will find they have less access to credit.

But these are only the most obvious effects.