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When former FDIC Chairman Bill Isaac called the Durbin Amendment "pure and simple, special-interest politics," he obviously meant that Dick Durbin was a tool of big-box retailers, which are the businesses that benefit from cutting debit card interchange fees in half. It's "price control" in its most naked form, and the retailers who receive the price cut claim it will benefit customers by reducing costs of each transaction. If you believe that retailers will pass along the reduced costs to consumers in the form of lower prices rather than keep the savings for themselves, I guarantee you that for a very reasonable price, I can get you a date with Sophia Vergara. Just send me $500.00 in unmarked twenty-dollar bills and trust me. Hey, would I lie to you?
Lining the pockets of the those who line the political committee coffers of pols is a time-honored tradition in this country, yet it's not the most odious aspect of this piece of federal legislative sausage. Legislation like the Durbin Amendment (as well as the remaining 2300 pages of that steaming heap of bat guano popularly known as "Frank's Folly") has all kinds of unintended consequences (as opposed to the intended consequence of increasing retailer profits). One of those unintended consequences is inconveniencing consumers, as consumers in Houston, Texas, and elsewhere will discover in the near future.
International Bancshares Corp. this week said it plans to close 17 grocery store branches in the Houston area by the end of the year.
The branches are among 55 branches the Laredo-based bank holding company will shutter. IBC cited new bank regulations limiting how much banks can charge for stores for debit card transactions as the reason for the closings.
The bank operates most of its Houston-area branches in H-E-B and Kroger stores, according to its website.
“Our customers have always made it clear to us that free products and services are extremely important to them,” Dennis Nixon, IBC chairman and CEO, said in a statement. “To keep those free offerings in place, we will have to reduce expenses. This means we will close 55 of our smaller in store branches located in grocery stores.”
IBC (Nasdaq: IBOC) expects the move to affect about 500 permanent jobs over the next 90 days.
So, as an added bonus unintended consequence to customer inconvenience, 500 bank employees will hit the streets to find new jobs as IBC reduces expenses to match reductions in fee income. This little vignette is just one example of many similar consequences that are unfolding, and will continue to unfold, all over the country.
The post-Dodd-Frank world that's looming on the horizon is starting to resemble the world created by Cormac McCarthy in The Road. For those of you who haven't read the book or seen the movie, that is not a good thing.
