Durbin caps fees that banks may charge on debit card transactions. As in all price-fixing schemes, it creates a windfall subsidy, in this case paid to merchants. It assumes that banks will pay the tab. But at levels written into recent rules, banks can't cover their costs, let alone make a profit. The fly in the ointment is that Durbin will kill the product, too, ultimately a loser for the community banks that lose the revenue, consumers who lose the convenience of a debit card but no longer qualify for credit cards, and merchants who lose sales facilitated by debit cards.The vote is especially noteworthy in that it will mark Congress' first retreat from its Dodd-Frank overreach, perhaps signaling an end to Congress' prolonged attacks on the health and soundness of our financial institutions.
Are there the votes? Vote counters guarantee about 55-57. Earlier today, at S.C.Bernstein & Co.'s "strategic decisions" conference in NYC, James Rohr, PNC's Chairman and CEO, said that he had spoken to more than 20 senators, and that all "didn't expect the Durbin amendment to be what it is." He expressed "hope" that the delay will find 60 votes.
Expect bank stocks to benefit if the bill passes.