The Durbin Amendment to the Dodd-Frank bill is legislation perfectly expressive of the Age of Obama. It directs the Federal Reserve to prescribe the interchange fees charged on debit card transactions at the incremental cost of the transaction incurred by the issuer of the debit card — if the issuer is a bank with over $10 billion in assets. The amendment directs the Federal Reserve to issue implementing regulations. What is the correct fee for a debit card transaction? The Fed is about to let us know.
The amendment is an ill advised piece of special interest legislation in the guise of consumer protection. The retail industry ardently sought its passage. Given the law of unintended consequences that governs such matters, however, you have to wonder if Target and Walmart won’t find something coming around akin to what they sent going around.
Repeal of the Durbin Amendment failed in the Senate this week. The Wall Street Journal and Forbes, among many others, frame the failure of repeals as a victory for retailers over big banks.
There are a few other losers, however, including limited constitutional government and basic property rights. One of the best discussions I have seen of the larger issues is James V. DeLong’s article “Washington’s seizure of sunk capital.” Please check it out.
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