Print Page Subscribe

Payments Perspectives Blog

Email page to a friend
Tweet this page
Share on Facebook
Share on LinkedIn
+1 This Page

The Durbin Debacle

Theodore Iacobuzio |

It’s always fun to transcribe great English prose; and when you spend a lot of time in the blogosphere, you can start feeling a little like you’re working in a windowless office in Manhattan in July with the air conditioning on the blink. Reading a real argument from a real thinker by way of contrast feels like taking a cold drink.

Which is a long way around the barn to the subject of the Wednesday, June 9, defeat of Sen. Tester’s bill to study and delay the implementation of the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. “Durbin”, as it’s known, is of course a veritable picnic basket of possible “unintended consequences”.

The whole notion of unintended consequences—that cool-sounding ideas often end in a hot mess—dates, we’re told, from the late 18th century, the era of the U.S. founding, Adam Smith, and of Edmund Burke, who in his “Reflections on the Revolution in France” had this to say about constitution-making in particular, but also about legislation in general:

“Nor is it a short experience that can instruct us…because the real effects of moral causes are not always immediate; but that which in the first instance is prejudicial may be excellent in its remoter operation, and its excellence may arise even from the ill effects it produces in the beginning. The reverse also happens: and very plausible schemes, with very pleasing commencements, have often shameful and lamentable conclusions.”

The bottom line for Durbin is that its proponents think it’s a case of Burke’s “first instance”: short term pain will be succeeded by long-term gain (lower prices for consumers—wait and see!). Those who oppose it think it is a very plausible scheme with a likely lamentable conclusion (less benefit for more money). In the middle is Sen. Tester, who merely wanted to look at the matter  (Burke’s “experience”). We’ll certainly let you know if consumers see a dime of this money.

Also appears on MasterCard’s The Heart of Commerce Blog.

Topics: Debit/Prepaid

Post a Comment