A recent article in the New York Times discussedthe change in tenor at the annual Davos Conference in Switzerlandthis past week (http://t.co/KXCGodm) as banking executives signal that theirmea culpa has been said and it’s time to take over the reins oftheir regulatory persona. I couldn’t agree more. As I continue toclosely monitor reaction to the Durbin Amendment regulations, I amimpressed at the organizational skill demonstrated by the merchantcommunity – especially big box retailers – and underwhelmed by thefinancial institution industry response.
Understanding that the banking industry in the United States inmany ways deserved the shellacking it received, nonetheless, thegenerally weak and uncoordinated response to regulations thatpromise to completely upend their business model is mystifying. Onehas to consider that the Federal Reserve is also in a positionwhere they have something to prove – that is their ability to reinin excess -and you now have a recipe ripe for disaster.
Perhaps the unrelenting state of competition has proved too high abarrier to overcome in coordinating a response to the proposedrules? The credit union industry has certainly not let that standin their way, but collaboration is more a part of their culture ingeneral. This is also true for community banks who rely on theICBA, for example, to pinch hit for them. Could the fact that theFed has been making commentary part of the public record (somecommentary at least) been keeping some responses in the closet soto speak? Have banks given up trying to influence regulators andturned their attention to their Congressional representatives forrelief?
Whatever the reason, the closing date for comments on the draftrules related to the Durbin Amendment is February 22nd.The rules (as proposed) will have a serious and far-reaching effecton the electronic payments market. I am hopeful that the period ofcontrition is over and financial institutions begin to argue theircase – una voce.