August 24, 2016
In a speech on Tuesday, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said he will introduce legislation this month called the Financial CHOICE Act, repealing parts of the controversial Dodd-Frank Act, including the cap on interchange banks can charge on debit transactions. Dodd-Frank, passed in 2010 shortly after the financial meltdown that led to a global recession, contained a provision called the Durbin Amendment that capped debit interchange and instituted rules around the network routing of debit transactions. Bitter recriminations were flung between banks and merchants during the legislative fight to pass Dodd-Frank and Rep. Hensarling’s speech has rekindled the same arguments: banks were against the measure because it instituted price controls, while merchants championed it because interchange represented a burdensome cost they said they were forced to pass on to consumers.
Banks and the network brands, through the Electronic Payments Coalition applauded Hensarling’s speech, saying the legislation will “promote economic growth” and that the group is looking forward to working with Rep. Hensarling on “ending this failed policy.” The NRF, on the other hand, speaking for merchants, said a repeal of Dodd-Frank would be “protecting bank profit at the expense of competition.”