It’s time to right wrongs of Durbin Amendment

Tom Kenning
Tom Kenning

On a cold January day in 1973, a ribbon-cutting ceremony occurred in Carbondale. The ribbon, made from 50 silver dollars attached to a string of tape later donated to Mt. Sopris Park, marked the beginning of Alpine Bank’s tradition of involvement in the community. More than 40 years later, Alpine Bank remains committed to the greater Colorado community.

Serving more than 130,000 customers, Alpine Bank is owned and operated by its employees. Still growing, the bank remains proud of its Colorado roots and is dedicated to directly supporting and being involved in the communities it serves. Not only does this come in the form of traditional banking support, such as loans and banking accounts, but this also means looking out for the local community and speaking out when overreaching government regulations stifle the bank’s customers on Main Street.

In 2010, a provision stuffed into a financial services bill by Sen. Richard Durbin, D-Ill., required the Federal Reserve to set price controls on interchange fees — the cost merchants pay to process transactions — on debit cards issued by financial institutions with assets totaling more than $10 billion. Even though small financial institutions like community banks were supposed to be exempt, this last-minute government regulation has proven to be detrimental for small banks and their customers.

Lobbying groups representing retailers fought for the Durbin Amendment and successfully got it passed without a single congressional hearing or study of its possible effects. These groups promised their members, primarily multinational big box retailers, would pass their savings from price controls on to the Americans who shopped at their stores. Six years later, there’s scant evidence that’s happened. According to a study by the Richmond Federal Reserve, just 1 percent of retailers have cut consumer prices. According to George Mason University, retailers actually have pocketed between $6 billion and $8 billion a year — now totaling $42 billion — as a result of Durbin price controls.

Consumers have suffered because losses from Durbin price controls have forced many financial institutions to eliminate services and benefits, like free checking and debit card rewards. Todd Zywicki, a George Mason University Foundation law professor, described how this outcome has affected low-income consumers in particular. At a U.S. Senate Banking Committee hearing last year, Zywicki said Durbin price controls present “one of the leading obstacles to the development of a low-cost, highly functional mobile banking platform that could provide not only essential financial services for millions of low-income and young consumers, but also their first step toward full financial inclusion.”

As if that weren’t enough, the Durbin Amendment also forced financial institutions to implement new and costly routing provisions that have done nothing to improve customers’ payments experience, while creating more paperwork and increasing compliance costs — both of which take away from Alpine Bank’s mission to serve its customers and the community.

The most bizarre twist in the Durbin story is that while it’s helped big box retailers, it’s hurt merchants that rely mostly on sales of smaller ticket items, including mom and pop stores in our community. According to data reported to the Federal Reserve, 31 percent of merchants have seen a rise in interchange fees post-Durbin. That’s because, along with getting rid of important consumer benefits, financial institutions were forced to cut back on the significant discounts they once offered for small ticket purchases.

Finally, Alpine Bank gives away nearly $1 million a year to local communities through a loyalty card program in which the bank donates 10 cents every time customers swipe their loyalty debit cards. Over the years, Colorado communities have come to appreciate and value this program, and Alpine Bank would like to ensure the continued legacy of these donations without the cloud of the Durbin Amendment.

Congress never should have allowed the federal government to intervene in the functioning free market. Durbin price controls are a disaster and must be repealed.

  Alpine Bank is committed to remaining the true community bank it has always been by serving its customers faithfully. This is why I am calling on Congress to recognize the failures of the Durbin Amendment and end this failed policy this year.

Tom Kenning serves as chief administration officer of Alpine Bank. Headquartered in Glenwood Springs, Alpine Bank operates 38 locations across Colorado and serves more than 130,000 customers. For more information, visit the website located at