These days, there's not a lot of sympathy out there for the big banks. That isn't likely to change through the advocacy of Steve Forbes. Of all the controversial provisions of Dodd-Frank, Forbes, and the banking industry, has seized upon the Durbin Amendment as the most dangerous.
Why? The Durbin Amendment caps the hidden fees that banks can charge you for swiping your debit card.
Timothy Noah at the New Republic lays out the real reason for the ire: to incentivize poor decision-making. He argues that “banks don’t want you to spend money that you have; they want you to spend money that you don’t have, so they can hit you with interest charges and/or fees.” A real political winner.
Don’t worry, Visa. Forbes has got your back. Through some impressive mental gymnastics, Todd Zywicki at Forbes writes that the recent antitrust lawsuit against Visa/Mastercard, which settles the class-action lawsuit between retailers and banks with one-time $6.6 million dollar payday, is a victory for you and me. Zywicki rapsodizes on the implications:
The disastrous effects of the Durbin Amendment to the Dodd-Frank Financial Reform legislation, which imposed price controls on debit card interchange fees, illustrates the damage that results from interest-group driven interventions into an economic ecosystem as complex as the payment cards industry.
I guess we shouldn't bother with regulation. The economic ecosystem is just too complex. There’s plenty of faulty logic embedded in Zywicki’s argument, but his principal error lies in blaming politicians rather than banks. There’s a perverse incentive system in place when we assume that banks must make a profit off of consumers at any cost.
When people are charged for using a debit card, they’re charged for spending their own money. The bank isn’t extending a line of credit, or providing an invaluable service. Technology is already illuminating the absurdity of these fees as safe and effective forms of payment, like Google Wallet or Square, become ubiquitous. Consumers and retailers don't have to settle for being nickle and dimed by the banking industry.
In addition to advocating for it on behalf of his magazine, Steve Forbes himself has, unsurprisingly, made the fight for finance a personal crusade. In an article for Politico, Forbes reiterates Zywicki's themes, smearing the Durbin Amendment as a "Soviet-style" intrusion into the virtous private sector. As someone who toils at a publication dedicated to the pampering of high finance, Forbes is a great point of reference. Whatever he advocates, average Americans should do the opposite.
If reducing debit card fees sounds like it should be uncontroversial, that’s because it should be. The banking industry's decision to pick a fight over the Durbin Amendment just goes to show how weak their case against Dodd-Frank really is.