Guest Post: If at First You Don’t Succeed, Try, Try Again


This guest post was submitted by Bette Grande, a former lawmaker who served in the state House of Representatives from 1997 to 2014.

During my time in the North Dakota Legislature, I learned that Bills, even bad ones, had a way of popping up session after session. It works the same for laws that failed to perform as promised. All we need is a tweak here and a tweak there and that will fix it, but some things cannot be fixed. Some public policy is just bad.

That’s the case with the Durbin Amendment, a ‘smoke-filled room’ regulation that politicians snuck into the Dodd-Frank Act more than a decade ago. The Durbin Amendment was supposed to save money for consumers by capping debit card interchange fees – the percentage of a transaction paid by the merchant when a customer uses a debit card. Those promises have fallen flat. Making matters worse, the Durbin Amendment created many unintended consequences that actually hurt consumers by making it harder for many to access banking services.

Even with a decade of data showing the failure of the Durbin Amendment, policymakers in Washington, D.C. want to expand it. The Federal Reserve announced in May it would reopen the Durbin Amendment to add even more regulations. This move was prompted by some retail industry lobbyists who sued the Federal Reserve to push for an even lower cap on interchange fees. Instead of taking a hard look at this policy that failed to deliver as intended, there is now a strong effort to expand it at the expense of consumers in North Dakota and across the country.

If the Durbin Amendment actually lived up to the hype, we might support it. Politicians and lobbyists promised that the Durbin Amendment would lower prices. It didn’t. The Federal Reserve Bank of Richmond found that consumers did not see any meaningful cost savings.

Besides broken promises, the Durbin Amendment actually harmed many consumers rather than protecting them. As it turns out, those interchange fees actually go back into banking products that people need and use, such as free checking accounts. The Federal Reserve determined that banks were 35 percent less likely to offer free checking products once the Durbin Amendment became law. The drop in free checking accounts and other banking services caused by the Durbin Amendment resulted in a loss of financial access for a million Americans. Banks have also invested significantly in financial security for consumers, an important service as more purchases are made online. An expanded Durbin Amendment could put consumers at even greater risk of fraud.

The Durbin Amendment was a failure from the beginning. Expanding it further and expecting a different result is not a good policy. Who is representing the consumer? There is no doubt that an expanded Durbin Amendment would only continue to cause harm to the economy and the people who rely on credit and debit cards for safe and secure transactions. North Dakota’s congressional team in D.C. should take a stand against this legislation that will only make a misguided policy even worse.