After Sen. Dick Durbin, D-Ill., successfully added his “swipe fee” amendment to last year’s Dodd-Frank financial regulation bill, he promised, “By requiring debit card fees to be reasonable … small businesses and their customers will be able to keep more of their own money.” That was the theory, at least.
Durbin pitched his amendment, which empowered federal bureaucrats to fix the fees banks can charge merchants for each debit card transaction at 24 cents, as a blow to the “excess profits” of “big banks.” Banks currently charge an average of just 44 cents per transaction, but for big retailers such as Walmart, all those transactions can add up. Analysts estimate that the Durbin amendment will be a $6.6 billion boon for the Targets and Walgreens of the world.
But big banks didn’t become big by eating billion-dollar losses. Last week Bank of America announced it will start charging customers a $5 fee every month they make at least one debit transaction. And BofA is not alone. Wells Fargo, Chase and SunTrust are all instituting similar versions of the “Durbin fee.” The bottom line is that whatever extra cash retailers are picking up from debit card transactions, consumers are losing from banks.
And it is not at all clear that consumers are going to recover any of the $6.6 billion more they will be paying banks in the form of lower prices from retailers. A study of Australian retail outlets after a similar regulation passed in that country found that none of the swipe-fee savings was passed along to consumers.
So all the Durbin amendment really accomplished was a multibillion-dollar-per-year income redistribution from consumers to retailers, who have given more than $90,000 to Durbin this election cycle.
A similar story played out last week in the health care sector. On Tuesday the Kaiser Family Foundation released its annual survey of employer health benefits, which found that family health insurance premiums rose 9 percent this year — sending them above $15,000 for the first time.
Why are health care insurance premiums rising during a recession? The percentage of Americans with health insurance fell for every demographic but one: adults aged 18 to 24. For that group, health insurance enrollment soared by 2.3 million. Why? Regulation. Obamacare forces all insurance companies to allow parents to add their adult children to their employer-sponsored, and taxpayer-subsidized, health care plans.
But adding 2.3 million Americans on to the nation’s health insurance rolls isn’t free. Like banks, health insurance companies don’t survive by giving away their product. Insurers just passed along the cost of covering all those adult children on to other Americans.
Liberals are largely dismissive of the unintended costs that their well-intended interventions inflict. And businesses have plenty to complain about. According to the Heritage Foundation, since January 2009 through the middle of fiscal 2011, the Obama administration has imposed 75 new major regulations with annual costs of $38 billion.
Despite a January 2011 speech promising to remove all “outdated regulations that stifle job creation,” the Obama administration has completed just six major deregulatory actions, saving only $1.5 billion.
Conn Carroll is associate editorial page editor of The Washington Examiner.