The new law and the Federal Reserve proposal is a gross intervention in a functioning market that will punish consumers with higher fees and fewer payment options.
Washington, DC (Vocus/PRWEB) February 17, 2011
The Independent Community Bankers of America (ICBA), the nation’s voice for community banks, told Congress today in a written statement that, if implemented, the Federal Reserve’s proposed rule on debit card interchange fees will lead to higher costs and increased restrictions for consumers.
“Debit cards have become a way of life for most Americans because they are vastly more convenient than carrying cash or a checkbook,” said Camden R. Fine, president and CEO of ICBA. “Banking customers have come to expect debit cards in connection with their checking accounts. The new law and the Federal Reserve proposal is a gross intervention in a functioning market that will punish consumers with higher fees and fewer payment options. For the good of millions of consumers and the nation’s Main Street community banks, ICBA urges this committee to prevent the Federal Reserve proposal from going into effect.”
ICBA vigorously opposed the Durbin interchange amendment during the consideration of the Dodd-Frank Wall Street Reform and Consumer Protection Act because the so called “carve-out” for small issuers won’t work. Not only will small issuers be sucked into the price controls called for in the rule, they will be disadvantaged relative to large issuers. The Federal Reserve’s proposed rule, if implemented, will further industry consolidation and lead to higher fees and fewer choices for consumers.
Survey results released this week by ICBA reinforce why the rule must be reconsidered. The ICBA survey of community banks found that:
- Ninety-three percent of community bank survey respondents said that they will be forced to charge their customers for services that are currently offered for free. These include services that customers have come to expect and value, such as use of a debit card with no annual, monthly or transaction fees and free checking, online and mobile banking.
- Nearly half of community banks say the rule will harm their customers – both consumers and small businesses – because it will make it difficult for them to continue offering competitive rates on deposits and loans.
- Sixty-five percent of community bank respondents say they will have to raise their qualification standards, either by strengthening debit card qualification thresholds or closing higher-risk transaction accounts.
- Nearly 20 percent say they will have to eliminate jobs or halt plans to open new bank branches – extending the impact from individual consumers to communities.
To read ICBA’s statement to the House Financial Services Committee, visit http://www.icba.org. To speak with an ICBA staff expert about this critical issue, contact Aleis Stokes at 202-821-4457.
The Independent Community Bankers of America, the nation’s voice for community banks, represents nearly 5,000 community banks of all sizes and charter types throughout the United States and is dedicated exclusively to representing the interests of the community banking industry and the communities and customers we serve. For more information, visit http://www.icba.org.
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