ICBA lobbying is a “serious conflict of interest that is undermining the interests of community bankers and distorting the political process.”
It’s not hard to understand why large banks oppose any attempt to overhaul the financial arrangements currently surrounding credit cards and debit cards. In the duopoly run through Visa and MasterCard, big banks earn fees that far exceed their costs.
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It’s much harder to understand why Independent Community Bankers of America, the trade group for small banks, is pushing so hard for the Tester bill (and effectively shielding big banks from political pressure), because community banks are explicitly exempted from having to lower their fees, and individual executives from at least some small banks publicly support the Durbin Amendment (see, for example, Senator Durbin’s letter to the I.C.B.A. last year).
The most plausible explanation is that I.C.B.A. is one of the country’s largest issuers of credit cards and debit cards — so the representatives from small banks actually have, in this regard, the incentives of a big bank. Although all of its members may be exempt from the debit-card fee provision, the association perhaps is not. To an outsider, this looks like a serious conflict of interest that is undermining the interests of community bankers and distorting the political process.
The I.C.B.A. needs to provide the details of this potential conflict in a transparent manner, including how much money the organization makes from its card business. It also needs to publish the full details of a “survey” that it uses to claim that most community bankers are against the Durbin Amendment. And it probably should also step back from its involvement in the Durbin-Tester debate.
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The Durbin Amendment charged the Federal Reserve with lowering the debit-card fees to a reasonable level that will cover costs, and the Fed is proposing to set this rate at not more than 12 cents for a transaction. But this rate would apply only to larger banks. By design, the Durbin Amendment does not apply to banks with less than $10 billion in total assets, and the Fed has confirmed that this exemption can be implemented (see this statement by Ben S. Bernanke, the chairman of the Fed).
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The I.C.B.A’s main justification for its position is a “survey” of independent community bankers that shows they are opposed to the Durbin Amendment — that is, lowering the debit fees of banks with which they compete. This result is odd, particularly given that a simple online poll by American Banker showed that 60 percent of its readers thought that small banks would gain from the amendment — and this result came after the I.C.B.A. tweeted that it wanted votes against the Durbin plan.
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It’s time for the I.C.B.A. to disclose those details. Is this a real survey or another instance of lobbying posing as research? The I.C.B.A. should share this information both with its membership and with the public.
http://economix.blogs.nytimes.com/2011/05/12/small-banks-and-debit-card-reform/?partner=rss&emc=rss