GLASTONBURY, Conn.--(BUSINESS WIRE)--

Dear Chairman Bair,

The Durbin amendment must be delayed.

As you are well aware, much of the current talk on Capitol Hill focuses on the scheduled July 21 implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin amendment, with members of Congress, federal regulators and lobbyists engaged in a heated debate over the provisions to this legislation.

It is clear to me these laws were created to reform Wall Street and protect consumers, yet neither does. Community banks and credit unions account for half of all small business loans, which lubricate local economies through business expansion and new jobs, as well as serve the essential everyday banking needs of consumers such as mortgages, car loans and deposit accounts. And when a community bank or credit union is closed, local communities have fewer financial alternatives which leads to more underbanked consumers and slower economic growth from small businesses. So what benefit is there in enacting a law that will desert Main Street America by increasing the failure and consolidation of community financial institutions in favor of strengthening their larger counterparts, and by bringing an already slow economic recovery to a crawl?

There are aspects of Dodd-Frank that are necessary to help prevent another economic collapse, but in the rush to both place blame and assure the American people that action was being taken there was not enough thoughtful examination of the bill and its policies. In fact, in a Congressional hearing just over a month ago, Fed Chairman Bernanke admitted the interchange measure could hurt small banks, producing a negative impact on local economies.

Chairman Bair, community-based financial institutions came into the recession strong, offering balance to their larger counterparts because they hold more of their own loans and have fewer charge-offs, and largely avoided the subprime mortgage crisis. Congress should have lauded community banks and credit unions for being pillars of economic strength, but instead forced these institutions to adhere to unnecessary compliance and regulations, while watching Wall Street banks score record profits.

To cover the losses from the proposed limits to interchange fees, an average $750 million financial institution would have to do one of the following:

• Eliminate 18 full-time employees, assuming $4.5 million in assets and $65,000 in salary and benefit cost per employee;
• Lower deposit rates by 16 basis-points;
• Require a $6.08 monthly fee on checking for balances below $1,000, assuming 60 percent of accounts do not meet the minimum; or
• Impose a monthly debit card fee of $3.65.

I appreciate your step in sending a letter to the Federal Reserve urging the adoption of a two-tiered pricing system for debit interchange. I suggest that only opens the door for more regulations, more debate and more lobbying by those hoping to improve their election coffers or corporate bottom lines.

I realize the outright repeal of the Durbin amendment is not a likely option, but delaying implementation to gain a better understanding of how it will affect all parties involved is a sensible step in ensuring we get this right.

Thank you for your time, and I do hope you continue to look deeper into the unintended negative consequences Dodd-Frank and the Durbin amendment have on community-based financial institutions and their ability to lead an economic recovery.

For Open Solutions Inc.
Hadas Streit, 646-428-0629
hadas@allisonpr.com

Source: Open Solutions Inc.