A fierce internal House GOP dispute over debit card fees is threatening to delay a sweeping Republican bill to scale back banking regulations enacted after the 2008 financial crisis.
The behind-the-scenes tug of war is pitting House Financial Services Chairman Jeb Hensarling (R-Texas), the author of the so-called Financial CHOICE Act, against some of his own committee members — all while an army of lobbyists has stormed the Hill to try to kill or save the legislation.
The fight centers on a single sentence in the nearly 600-page text that would give banks greater freedom to hike debit card fees for retailers, which were capped as part of the 2010 Dodd-Frank law that strengthened banking rules after the 2008 crisis.
Hensarling during a closed-door Republican conference Tuesday morning made a last-minute pitch to his colleagues to get in line with the legislation, calling the debate the “elephant in the room.” But Republican opponents of the provision, led by Rep. David Young of Iowa and Rep. Dennis Ross of Florida, have started their own counter-whip to strip the provision from the text.
“If Durbin is repealed, two major companies will have over 80 percent share of the market [and] will dictate the price of routing fees — all to the detriment of consumers,” Ross said, referring to the banking fee cap’s nickname for it’s original author, Sen. Dick Durbin (D-Ill.).
Ross, who wants the bill to pass without the cap repeal, called the provision an “impediment to passage” that “will put members in a position of having to take a vote between two groups that they support: retailers and bankers.”
“To politically do that, knowing that the Durbin repeal will not survive the Senate, would do greater damage to our conference,” he continued.
Meanwhile, lobbying on the issue has reached a boiling point this week. The banking industry is fighting to keep the repeal proposal in the bill. But they’re facing off against retailers, restaurants and airlines from across the country that want to gut the language.
GOP lawmakers have been the target of dueling ad campaigns in recent days, and 30 members of a group trying to undo the language — the Merchants Payments Coalition — will descend on the Hill this week to make closing arguments.
“We are well outside the margins of killing this bill,” said Austen Jensen, vice president of government affairs for the Retail Industry Leaders Association, which believes it’s muscled up enough “no” votes to block the bill on the floor if it contains the repeal.
House leadership is well aware the issue could delay the legislation — a top GOP priority — but has yet to decide how to proceed. House Majority Whip Steve Scalise’s team will test the waters in the next 48 hours with a tentative count of the yeas and nays. The Louisiana Republican is also holding an educational session for members on Wednesday morning to try to debunk any misunderstandings.
Should there be sufficient opposition to defeat the legislation as drafted, leaders will have to decide whether to crack the whip and try to pass the bill as is — or strip the provision entirely through a floor or manager’s amendment. Privately, several senior Republicans are expecting the latter, though it will be up to leadership and Hensarling, who drafted the bill.
Hensarling, for his part, told lawmakers the conference should work its will during the members-only meeting Tuesday, suggesting he may be open to the change.
“I think we ought to stand against price-controls,” said Rep. Mark Sanford (R-S.C.) coming out of conference Tuesday morning.
Others aren’t so sure, however.
“It’s definitely controversial,” said Financial Service panel member Peter King (R-N.Y.), who backed the bill in committee but said he hasn’t decided how he’d vote on the floor: “I’m still looking at it.”
The debate over what to do has already stalled the legislation, which was tentatively scheduled to come to the floor for a vote before the Memorial Day recess. Now, it’s unclear if the bill will come up when lawmakers return from next week’s recess.
“It’s the biggest sticking point in the bill for some people because it’s banks against retailers,” said Rep. Scott DesJarlais (R-Tenn.), who is disappointed by the delay in the legislation: “I did think we were going to do this before Memorial Day.”
The conflict has been brewing since last year, when Hensarling’s committee held a vote on an earlier draft of the bill in the run-up to the election. Ross and Bruce Poliquin (R-Maine), another panel member, took the rare step of speaking out publicly against the proposal as the committee worked on the new version of the bill, though neither attempted to amend it during a committee vote and they both voted in favor of the legislation earlier this month.
Hensarling since then has acknowledged that the provision is the most contentious part of his bill among Republicans.
Opponents of the provision want Republican leaders to find a way to eliminate the language from the bill without resorting to a standalone floor amendment that would force members to publicly pick a side, though they say they would have the votes to win if it came to that.
The opposition to the proposal has unified Republicans and Democrats, who are otherwise at odds over the other key components of the bill, which would largely dismantle the Dodd-Frank law.
“We’d have significant support among Republicans to keep it and very solid support among Democrats to keep it,” said Rep. Peter Welch (D-Vt.), who has been leading efforts to gut the language.
Bank lobbyists are well aware of the intense opposition. More importantly in the bigger picture, they also know it is highly unlikely that the Senate will want to revisit the debit card debate after its own messy fights over the issue. Senate Republicans are not planning to take up Hensarling’s bill as drafted and will opt to write their own deregulatory legislation, which may include some of his ideas.
Nevertheless, bank lobbyists are keeping up the fight in the House against the language.
“We are pleased at the positive feedback we have received from House members and believe we are in a good position to repeal the Durbin amendment,” said James Ballentine, executive vice president of congressional relations at the American Bankers Association.
Hensarling, for his part, has said he’s confident the House would pass the bill regardless of what happens with the debit fee cap.
“I stand ready to negotiate at any time any issue but at the end the day I expect to get CHOICE off the floor,” Hensarling said in an interview. “I’ve made my views known on Durbin. Others will make their views known. Stay tuned.”