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SALT LAKE CITY -- Utah's freshman Senator is part of a group asking for a much-needed timeout before a law is implemented that could affect just about everybody who shops with a debit card.
Senator Mike Lee is among the leaders of a move in Congress to derail a last-minute amendment to a series of sweeping financial reforms designed to protect consumers.
The problem is, this particular measure appears to have nothing consumer-friendly about it.
The so-called "Durbin Amendment" to the Wall Street Reform and Consumer Protection Act would cap the fees that banks and credit unions charge to process debit card transactions. Bankers say the measure would greatly benefit large retailers who pay the processing fees.
The fees are currently negotiated between banks, retailers and the card issuers, under an extremely complicated set of parameters. By setting a firm cap on fees, banks say they will not be able to afford the costs of processing and insuring debit transactions against fraud. They would be forced, in that case, to increase the fees they charge - quite possibly, for all bank services.
One large bank has already suspended its rewards program for debit card users, directly because of the amendment.
Consumers could lose, or pay more for banking services they currently take for granted. It's also possible the use of debit cards may eventually be restricted to only certain retail establishments. Consumers would only win if the money retailers save by paying lower processing fees is passed on to their customers in the form of lower prices.
We're not willing to bet it will be.
The Durbin Amendment was passed with little debate, and it represents the worst kind of government meddling in a marketplace that is not, by any obvious measures, broken.
KSL supports Senator Lee's efforts to bring this law back to the drawing board for a full and open reckoning on whether it fixes a problem that even exists.
Email: cpsarras@ksl.com
