CBA Statement on U.S. Senate Passage of the Financial Regulatory Reform Bill

SACRAMENTO – Rod Brown, president & CEO of the California Bankers Association, released the following statement today regarding the Senate passage of financial reform legislation (S.3217):

“For nearly a year, the California Bankers Association (CBA) has been engaged in the financial regulatory reform debate, and our message has been clear and consistent: while California banks fully support effective consumer protection and any reasonable efforts to strengthen regulatory oversight, we are strongly opposed to efforts that would increase the regulatory burden on traditional banks, while neglecting to address the regulation of nonbank financial institutions. We are extremely disappointed with the bill passed yesterday in the Senate, which fails to address key elements we believe are critical in order to prevent future financial crises.

“While the bill does contain a few key reform principles supported by the CBA, the bill includes far too many negative provisions that will ultimately harm traditional banks, imposing huge new burdens on them, impacting their ability to provide credit to small business men and women and help create jobs in their communities. The worst example is the passage of the amendment on interchange fees, which limits interchange fees on debit cards to the cost of the specific transaction. This mandated price control ignores all the major costs of interchange, including the infrastructure costs, fraud losses and return on capital. It is a subsidy to the retailers, who extract great benefits from debit cards, such as reduced personnel and fraud costs. That subsidy will, in large part, end up being paid by consumers.

“The Senate completely missed the mark yesterday, wasting an opportunity to enact real reform. Instead, 59 senators, including California Senators Feinstein and Boxer, chose to support legislation that forces additional, needless regulation on the traditional banking industry, which will only undermine the industry’s ability to serve our communities during these challenging economic times. Traditional banks that continue to lend today are critical components to our financial recovery, something this legislation unfortunately fails to recognize.”

About the CBA
Established more than 119 years ago, the California Bankers Association (CBA) is one of the largest state banking trade associations in the country. CBA leads the way in developing relevant educational and legislative solutions to some of California’s more pressing financial and banking issues, including adult financial empowerment, identity theft, financial privacy, and financial elder abuse. CBA’s membership includes more than 200 of California’s commercial, industrial and community banks and savings associations. For more information, visit www.calbankers.com.

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