Lawmakers Move to Exempt More Banks From Debit Card Fee Caps

Two bills passed Tuesday (May 12) by the House of Representatives are only the latest efforts by lawmakers to cut red tape for smaller banks.

A bill in the U.S. Senate would exempt more small financial institutions from the Durbin Amendment to the Dodd-Frank Act rule that caps debit card fees.

The Community Bank Relief Act (S.3849) would raise the current $10 billion asset threshold exempting small financial institutions from the rule and would tie that threshold to the annual cost-of-living adjustment measured by the Consumer Price Index (CPI), its sponsors said in a Feb. 13 press release announcing the introduction of the bill.

There has been no action on the bill since it was introduced and referred to the Senate Banking Committee on Feb. 11, according to Congress.gov.

An identical bill in the House, the Community Bank Relief Act (H.R. 7484), was introduced and referred to the House Financial Services Committee on Feb. 11. There has been no action on the bill since then, per Congress.gov.

The sponsors, Sens. Katie Britt, R-Ala., and Ted Cruz, R-Texas, said in the release that this update to the rule would protect community banks by allowing them to strengthen their financial flexibility and would reduce costs for American families.

They added that in the time since the Durbin Amendment was enacted in 2010, a larger share of the banking sector has been brought under the fee cap than was intended. While 80 banks exceeded the $10 billion threshold in 2010, about 130 banks exceed it today.

Britt said in the release that the Community Bank Relief Act would update this “outdated threshold” and provide relief to community banks that were never intended to be covered by the regulation.

“As we’ve seen in so many instances, countless regulations in the Dodd-Frank Act were not only onerous but set fixed thresholds that have become outdated over time, and the Durbin Amendment is no exception.”

Cruz said in the release that the bill will help small banks by modernizing the cap to reflect inflation.

“The Durbin Amendment was not designed for the current economic and regulatory reality and subjects community banks to fee limits that the original language intended for much larger institutions,” Cruz said.

PYMNTS reported Wednesday (May 13) that the bills passed Tuesday by the House would tailor the supervisory requirements and reduce the frequency of examination for smaller financial institutions that are well managed and well capitalized.