[Congressional Record (Bound Edition), Volume 157 (2011), Part 6]
[Senate]
[Pages 8755-8756]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            DURBIN AMENDMENT

  Mr. CORKER. Madam President, I rise today to speak about something 
that is affectionately known as the Durbin amendment. During the Dodd-
Frank debate that occurred about a year ago and upon its passage, there 
was an amendment brought to the floor called the Durbin amendment which 
dealt with debit cards and regulating debit cards. This was an 
amendment that never had been debated. There had never been a hearing 
on this amendment. In the height of people being very concerned about 
the large financial institutions in our country, this was an amendment 
that passed. I voted against it. I thought it was bad for us as a 
country to allow the Federal Reserve to begin setting prices for 
specific industries as the Durbin amendment called for. In any event, 
the Durbin amendment became law. I know numbers of people in this body 
have been contacted since that time about the effects of the Durbin 
amendment.
  What the Durbin amendment did was tell the Federal Reserve to set 
prices on debit cards based on incremental cost. Let me say that one 
more time: based on incremental cost. In other words, when a business 
does business, there are fixed costs and there are incremental costs. 
It would be like saying to a pizza company that sells pizzas across the 
counter that the only thing they can charge for is the dough. They 
couldn't charge for anything else that went into the cost of the 
product that was being sold.
  I am obviously opposed to price setting. I realize we don't have 60 
votes in this body to do away with price fixing in general as it 
relates to debit cards. I also realize a lot of people in this body 
believe there is a problem, if you will, with an almost monopolistic-
type atmosphere as it relates to debit cards in general. So what I have 
tried to do is seek a better solution than the one that has come forth. 
Senator Tester and I have worked together. We have made actually three 
revisions to an amendment that I hope we will be voting on over the 
course of the next 48 hours, maybe 72 hours. It has been crafted in a 
way to bring people together. What it does, the essence of it, is that 
it directs the Fed to--instead of setting prices on debit cards based 
solely on the incremental cost of the transaction--consider all costs, 
both fixed and incremental, which is something that anybody in this 
body who happened to be in business certainly would want to be the 
case.
  I know there has been a lot of populism in this body and a lot of 
people have tried to rail, if you will, against financial institutions. 
I know a lot of people have empathy with retailers who find themselves 
in a situation where it is difficult for them to negotiate prices as it 
relates to debit cards. What this would do, though, is still leave 
debit cards as a regulated entity. It is not the solution I would 
ultimately like to see, but I think it is a solution we may be able to 
agree to in this body. It would leave that regulated, but it would 
direct the Fed to consider all costs, fixed and incremental. Again, it 
is a very commonsense measure.
  I know there have been lots of discussions about a solution to this 
Durbin amendment. I know it is an issue most people in this body wish 
to see go away. A lot of people feel as though they are being pitted, 
if you will, between the financial industry and retailers.
  I think the solution Senator Tester and I, working with Senator Crapo 
and others, have come up with is one that meets the commonsense test. 
It brings people together around a policy of solving a problem that was 
created, again, without a lot of discussion on the Senate floor, and 
certainly no hearings. So I ask Members of the body to please talk with 
their staffs about the most recent changes that have been put forth in 
this amendment.
  This is not something that is trying to stave off or keep the effects 
of the Durbin amendment from taking place, but what it does is put a 
more fair structure in place where the Fed can actually look at all 
costs relating to a transaction. Again, think about it. If someone is 
selling pizzas in a pizza restaurant or a retail establishment and they 
were told the only thing they could do is charge for the dough that 
went into the pizza and nothing else--none of the rent, none of the 
other costs that go with operating the facility--obviously they 
wouldn't be in business very long.
  I think all of us want to see the financial industry continue to be 
innovative. I think all of us see a day when we are going to be able to 
basically pay bills with our electronic devices, and continued 
innovation is going to take place, which causes our economy to expand.
  I believe this amendment, which has been shaped by a number of people 
in this body, meets the commonsense test. I think it provides a good 
solution for those people who actually voted for the Durbin amendment 
on the floor and realized afterwards what was happening, which was 
putting in place a price structure that is not sustainable for debit 
cards and over time, no question--over a very short amount of time--
quickly--is going to be very adversely affecting consumers all across 
this country.
  I thank the Chair for the time. The Tester-Corker amendment is 
designed to create a more productive solution than was offered under 
the Dodd-Frank debate and the Durbin amendment. I hope all Members of 
this body will look at this seriously. I know everybody has been 
contacted. I understand this is a very contentious issue. This solution 
is being put forth to solve a problem, not to take one side or another. 
It leaves the debit card industry as a regulated industry, but allows 
the Fed, as it should, to take into account both fixed and incremental 
costs as they look at what the pricing structure ought to be.
  In addition, I know a lot of people have been concerned about what is 
going to happen with small financial institutions. Obviously, their 
costs for debit transactions are much higher than the larger 
institutions in this country. People have been concerned about the 
impact on them. What this would also do is give the Fed the ability 
every 2 years to see if the policy they put in place is adversely 
affecting the smaller and rural banks or the community banks or smaller 
credit unions, to make sure that if they are being affected adversely, 
then they can recommend--not prescribe but recommend--some legislative 
fixes for that.
  Again, I hope Members of this body will see this as a reasonable 
solution. I urge all of my colleagues to contact me personally or 
Senator Tester personally to talk this through if they have any 
questions, and hopefully we can bring to an end this contentious debate 
over an amendment that was passed on the Senate floor without any 
hearings, and which I think all of us know is going to create a lot of 
unintended consequences for people all across this country.
  With that, I yield the floor, and I note the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. WHITEHOUSE. Madam President, I ask unanimous consent the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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