Reforming Dodd-Frank is necessary for fair, consumer-friendly economy

In Texas, we value hard work and honesty and hold ourselves to those standards in everything we do.

Our hard work has gotten us one of the strongest state economies in the country, and it ranks third for economic activity — but we can always improve.

Unraveling the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act is a regulatory reform supported by President Trump.

Less burdensome regulation and pro-growth legislation are necessary for our economy to thrive, which requires repealing some measures that are not honest and transparent and are proven failures.

One of Dodd-Frank’s most dubious regulations is the Durbin Amendment, which has harmed consumers, small businesses, community banks and credit unions.

Fortunately, the leadership of the U.S. House Financial Services Committee, including North Texas congressmen Jeb Hensarling and Roger Williams, has called for removing the Durbin rule.

Back in 2010, this last-minute provision was snuck into Dodd-Frank to manipulate the functioning free market for debit card transactions.

In addition to necessitating a new set of costly routing requirements, the law enacted price controls on debit interchange fees (what retailers pay to accept debit card transactions).

Financial institutions use the fee revenue to maintain and upgrade the electronic payments system, ensuring we all have access to convenient, secure ways to pay beyond cash and checks.

Since the implementation of Dodd-Frank and the Durbin Amendment, credit unions and community banks are spending 39 percent more on regulatory compliance for a total of $7.2 billion each year.

Additionally, Durbin’s burdensome network routing and exclusivity provision resulted in considerable compliance costs for institutions that were supposed to be protected from the law’s harmful effects.

Anything that impacts nonprofit credit unions actually hurts our members. Regulatory compliance costs may affect loan rates or other customer benefits.

But there’s more. To get this law passed, big-box stores promised they would pass on any savings to consumers by lowering prices at the register.

Yet, studies show that despite receiving $6 billion to $8 billion each year, just 1 percent of retailers lowered prices — and 22 percent actually increased prices.

Broken promises like these have allowed big-box stores to pocket $42 billion at customers’ expense, which just is not fair (or honest).

Meanwhile, many hardworking small businesses, an estimated one-third of merchants (primarily small-ticket item sellers) have seen their fees rise. are seeing their interchange fees rise.

Moving to a one-size-fits-all interchange fee system forced card networks to eliminate discounts that which were previously given to businesses selling small-ticket items in the free market system.

We will fight to see the failed Durbin Amendment repealed to the benefit of consumers and debit card users.

Let us bring back honest, transparent values to financial regulation and provide our Main Street and community financial institutions — and our members and customers — with the resources needed to further strengthen our economy.

This story was originally published February 24, 2017 at 3:19 PM with the headline "Reforming Dodd-Frank is necessary for fair, consumer-friendly economy."