Proposed Dodd-Frank Reforms a Step in the Right Direction

For more than 15 years, bureaucrats have used the Dodd-Frank Act to make it exceptionally difficult for banks to provide services to consumers. Lawmakers are finally taking some much-needed steps to undo the damage. Senators Ted Cruz (R-Texas) and Katie Britt (R-Alabama) just introduced the Community Bank Relief Act, a targeted fix aimed at partially rolling back the Durbin Amendment—which introduced costly price controls on debit card interchange fees.

Their bill would raise the Amendment’s current $10 billion asset threshold by indexing it to an annual cost-of-living adjustment (COLA) measured by the Consumer Price Index (CPI). While the ideal would be completely eliminating the Durbin Amendment, the threshold ensures that fewer banks are subject to costly and crippling mandates.

By arbitrarily capping debit interchange fees—or charges paid by merchants to card-issuing banks for processing transactions, the Durbin Amendment has wreaked havoc on financial markets. Ranging from rampant fraud to increases in the cost of everyday banking services, there has been no shortage of unintended consequences. Meanwhile, the vast majority of merchants—who the Durbin Amendment was designed to help—did not report lower costs or debt. 

However, these aggregate results mask uneven effects among sellers. According to a 2024 analysis by Cato Institute scholar Ronald Bird, “fee reduction benefits to merchants were not uniformly distributed: merchants whose sales were concentrated in the small (below average) price category received small or even negative benefits, and merchants whose sales were in the high (above average) price category benefited most.” Intentions aside, the policy benefited only the largest retailers.

Meanwhile, consumers bore the brunt of the changes. According to an October 2025 analysis published in the peer-reviewed Journal of Financial Economics, bank interchange revenue—the basis for “attractive rewards” tied to debit cards—fell “by over 30 percent ($8.2 billion annually) for banks subject to the regulation.” Meanwhile, “Banks passed 14 percent of Durbin-induced losses onto their customers by raising checking account fees. Those subject to the regulation reduced the availability of free checking accounts¹ from 58 percent in Q2 2010 to 28 (20) percent in Q4 2011 (2013); increased monthly checking account fees from $4.30 in Q2 2010 to $6.65 ($7.62) in Q4 2011 (2013); and raised minimum balance requirements to avoid these fees from $1,049 in Q2 2010 to $1,399 ($1,339) in Q4 2011 (2013).” The era of free accounts and lucrative rewards quickly came to an end, with the latter shifting mainly to credit cards—though perhaps not for much longer.

The Durbin Amendment’s requirements don’t impact all banks; the $10 billion asset threshold was put into place to shield smaller financial institutions. This low limit has not aged well. As Sens. Cruz and Britt note, “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.”

Tying the limit to CPI doesn’t fully solve the problem of the Durbin Amendment’s continued existence. But raising the threshold over time at least neuters some of the Amendment’s impact and is a step in the right direction. Lawmakers should continue fighting against misguided meddling in financial markets, including extending price controls and mandates to credit cards. Sens. Cruz and Britt’s proposal is a welcome start.