U.S. Senators Katie Britt, Ted Cruz Introduce Legislation to Protect Community Banks

WASHINGTON, D.C. — U.S. Senator Katie Britt (R-Ala.) joined Ted Cruz (R-Texas) in introducing the Community Bank Relief Act. The legislation updates the current $10 billion asset threshold exempting small financial institutions from a rule that caps debit card fees.

“As we’ve seen in so many instances, countless regulations in the Dodd-Frank Act were not only onerous but set fixed thresholds that have become outdated over time, and the Durbin Amendment is no exception. The largest burden is on our smallest financial institutions who provide vital sources of credit to Main Streets that drive our local economies,” said Senator Britt. “This commonsense legislation would simply index, to both inflation and COLA, the outdated threshold in this provision of Dodd-Frank, ultimately providing relief for our community banks who were never intended to be burdened by this regulation.”

The Community Bank Relief Act would raise the $10 billion asset threshold established by the Durbin amendment to the Dodd-Frank Act for covered bank issuers, as well as tie it to the annual cost-of-living adjustment measured by the Consumer Price index (CPI). This would enable more community banks to remain exempt from the Durbin restrictions, allowing them to strengthen their financial flexibility and ultimately reduce costs for American families. You can read the full text of the bill here.

“The Durbin Amendment was not designed for the current economic and regulatory reality and subjects community banks to fee limits that the original language intended for much larger institutions,” said Senator Cruz. “My legislation modernizes the interchange fee cap to reflect inflation, helping small banks support local economies while lowering banking costs for Americans.”

The Durbin amendment to the Dodd–Frank Act, enacted in 2010, authorized the Federal Reserve to cap debit card interchange fees charged by large card issuers and limits transaction fees for debit card purchases by capping fees at 21 cents plus 0.05% of the transaction for banks with assets of $10 billion or more. Currently, the cap stands at roughly 22 cents per transaction. When Dodd-Frank passed, roughly 80 banks exceeded the $10 billion threshold. Today, roughly 130 banks have exceeded the $10 billion threshold, bringing a larger share of the banking sector under the fee cap that was unintentionally captured under the existing limit.

Senator Britt has been a longtime champion of community banks and local credit unions and their role in affordability for Americans across the nation. She previously led the Preventing Regulatory Overreach to Empower Communities to Thrive and Ensure Data privacy (PROTECTED) Act, which seeks to shield small financial institutions and Main Street businesses from regulatory overreach and excessive compliance costs and standards.

This bill is supported by Americans for Tax Reform, Alabama Bankers Association, and America’s Credit Unions.

Scott Simpson, President & CEO, America’s Credit Unions said, “America’s Credit Unions appreciates and supports the Community Bank Relief Act introduced by Senators Ted Cruz and Katie Britt and Congressman Andy Barr to modernize the asset threshold tied to debit interchange regulations.

“As credit unions grow by serving more members and keeping pace with the economy, many are swept into limits that were intended for much larger institutions. Indexing the threshold to inflation provides needed relief and restores fairness for community-based credit unions.

“Debit interchange revenue at credit unions is reinvested into lower fees, better rates, fraud prevention, and improved services for members. When outdated thresholds reduce those resources, it is working families and small businesses who feel the impact.

“This legislation is an important step forward. But the only real long-term solution is full repeal of the Durbin Amendment. Government imposed price controls have distorted the market and failed to deliver promised savings to consumers. While most credit unions were supposed to be protected from the impact of the Durbin Amendment, the fact is that those provisions did not work, and all have felt the negative impacts. Repeal would ensure credit unions can continue delivering affordable, secure financial services without artificial caps that miss their mark.”

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