Interesting Times, Indeed

This month, the nation bids adieu to the Obama Administration and ushers in the administration of Donald Trump. The new President is promising sweeping change, and he will have at least four years to bring it about. He’s likely, though, to begin wielding the broom on his first day in office.

That means the payments business is in for “Interesting Times,” as senior editor Jim Daly’s story in this issue says as he lays out what’s at stake. There is a wide range of action the new Trump Administration could take that might affect payments, and in this issue payments advisor Eric Grover focuses on what he thinks it should do.

We don’t enjoy here nearly the space these gentlemen have, so we’ll confine ourselves to brief remarks about two matters they discuss that bulk large for payments executives: the 2010 Dodd-Frank Act and its creature, the Consumer Financial Protection Bureau.

Now, Dodd-Frank, of course, is a sweeping—some would say unwieldy—effort at regulating the U.S. financial system. It came early in the Obama Administration as a reaction to the financial meltdown of 2007-08 and the Great Recession that flowed from it. But the part of Dodd-Frank that most concerns the payments business is the Durbin Amendment, which puts a ceiling on debit card interchange for big issuers and requires all issuers to offer merchants at least two alternatives for routing debit transactions.

Rep. Jeb Hensarling, R-Texas, is leading an effort to radically revise Dodd Frank. Among these changes would be a repeal of the Durbin Amendment. We take no position on the question of the broader Dodd-Frank Act but we hope the Trump Administration will at a minimum endorse the effort to repeal Durbin. We argued against this pernicious effort at price regulation in 2011, when it was under consideration, and we have not seen anything in the past five years that would change our mind.

As for the CFPB, has there been any clearer example in Washington of the concept of overreach? This is a regulatory bureau that is run not by a bipartisan commission but by a single director, is entirely independent of Congress, and is bent on issuing diktats that could break an elephant’s back. Its set of rules for prepaid cards, at more than 800 pages, is a recent example. The new administration could render a service by helping the effort now under way to contain this agency.

President Trump is an unpredictable man, so little if anything can be counted on as certain. Still, the coming months will be more telling for the payments industry than any comparable time in recent memory.