WASHINGTON – Yesterday, the Senate Committee on Banking, Housing and Urban Affairs marked up and favorably reported the “Financial Regulatory Improvement Act of 2015” on a party line vote of 12 to 10. Authored by Chairman Richard Shelby (R-AL), the draft bill would enhance oversight of the Federal Reserve and scale back the regulatory obligations placed on financial institutions by the Dodd–Frank Wall Street Reform and Consumer Protection Act (or Dodd-Frank Act), which was passed after the financial crisis in 2010 to shore up the financial system.

Of serious concern to NACS, the bill contains a provision that would amend the Durbin Amendment to the Dodd-Frank Act, which reformed debit card swipe fees.

Currently, debit reforms only apply to banks that have more than $10 billion in assets – approximately 1.5% of all banks.  The draft bill would index this $10 billion asset threshold to the national Gross Domestic Product (GDP), ultimately reducing the number of banks potentially subject to debit reform. This change would have a negative impact on consumers, convenience store owners and other retailers by exempting more banks from the reforms. For this reason, the Merchants Payments Coalition (MPC), of which NACS is an Executive Committee member, actively advocated to remove the provision, including sending a letter to Committee members, and ultimately opposed the bill.

It should be noted that the dollar threshold for the Durbin Amendment was not singled out by the bill’s author, Sen. Shelby. The bill also would index the other dollar thresholds in the Dodd-Frank Act – ones that determine whether banks are systemically important, subject to certain Consumer Financial Protection Bureau (CFPB) regulations and the like – to GDP.

Committee members considered several amendments during the markup, including a substitute amendment offered by Democrats, which would not have made the change to the Durbin Amendment.  The Democratic substitute was voted down on a party line vote. Two other amendments were successful: Sen. Michael Crapo’s (R-ID) amendment to prohibit banking regulators from participating in “Operation Choke Point” investigations; and Sen. Patrick Toomey’s (R-PA) amendment, which would increase the threshold for CFPB bank examinations from $10 billion to $50 billion. In addition, Sens. Toomey and David Vitter (R-LA) each offered and withdrew several amendments.

Even though the bill passed in committee, because the bill did not get a single Democratic vote, it is considered dead. Senator Shelby will try to find some Democrats in the Senate with whom he can negotiate in order to get bipartisan support for the bill. Given Senate rules, that is the only way that the bill would be able to get a vote in the full Senate. NACS and the MPC will continue to actively oppose the bill unless and until the provision exempting more banks from the Durbin Amendment is withdrawn.