Will Interchange Regulation Push 884 Troubled Banks Over the Edge?

Will government Interchange regulation push 884 banks on the brink of failure over the edge?

According to a BankInfoSecurity.com post, the number of banks on the Federal Deposit Insurance Corp.'s "Problem List" totaled 884. If these institutions are already hurting, will any survive the Feds plan to cap debit Interchange fees?

The Independent Community Bankers of America speculates that the exemption for small banks (<$10 billion) to the Fed Interchange price cap will fail to protect these institutions for the following reasons:

  • As the largest debit issuers, mega banks will influence networks to limit support of dual pricing schemes that make their cards less attractive to merchants.
  • Merchants will discriminate against any high-cost cards customers present.
  • Debit card transactions are more costly for small banks.

The mega banks are too big to fail so does it really matter if they make or lose money on debit cards if the tax payers will foot the bill? Will this just be another unintended consequence of the Dodd-Frank Durbin Amendment or conspiracy theory to, some day, limit us to national banks?

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