Jonathan C. Kinloch

In 2022, I cannot stress enough how important banking and credit access is to modern life. It’s how we take out loans to start businesses, create savings plans to build wealth for our families and access debit and credit cards. 

For African Americans, this banking and credit access is essential to overcoming the systemic barriers to financial inequality that we face. Data from 2019 from the Board of Governors Federal Reserve system shows that 32% of us are underbanked and 14% are totally unbanked, meaning only 54% of us are sufficiently banked.

An analysis last year from the Brookings Institute discovered that African Americans on average pay more than twice as much in monthly bank fee costs compared to their White peers. This is unacceptable. 

Clearly, federal legislators need to focus on fixing these inequities in our nation’s banking system and work on expanding banking and credit access. Yet some are doing just the opposite. Big retailers and their D.C. lobbyists are currently trying to shove through financial policies that will take hard-earned money straight from our pockets and into theirs.

I’m talking about recent efforts to bring back and expand the routing mandates of the 2010 Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. This amendment, which passed at the last minute with very little research on its impacts to consumers, added routing mandates and an interchange fee cap to our debit market.

The goal of the legislation was to save money for retailers on processing debit card transactions, so they could pass those savings down to their customers by lowering prices. It should be no surprise that this did not happen.

In fact, a study from the Richmond Federal Reserve found that nearly all retailers kept their prices the same or raised them after the Durbin Amendment passed, even though they collected $105 billion in extra revenue.

We can clearly see that the Durbin Amendment did not give consumers the savings it promised. On top of this, the amendment actually took money away from everyday people.

Banks lost billions in administrative costs trying to comply with the routing mandates and adding extra payment networks to their systems, which they then tried to make back these losses at the expense of consumers. They raised fees, cut free checking and hiked account minimum balances, all things that financially marginalized communities depend on to keep their bank accounts open. 

A 2014 study from George Mason University found that the Durbin Amendment increased our country’s unbanked population by one million Americans. Of course, this was primarily in minority and low-income communities where people already struggled to access banking.

The National Black Chamber of Commerce even spoke out against the amendment after its passage, with their co-founder and president pointing out that the amendment “threatens the financial future of millions of up-and-coming consumers and entrepreneurs.”

After all this, Congress must reject any attempts to extend the Durbin Amendment routing mandates to credit cards. Banks will again lose billions and pass these losses onto consumers, this time by trying to cut back on credit card benefits.

This means raising interest rates, hiking fees and implementing stricter credit standards, transferring as much as $50 billion annually away from consumers and directly to big retailers.

Just like last time, the people who will suffer the most are those who already struggle.

Congress must reject any attempts to impose routing mandates on our credit market. Routing mandates will make credit more expensive and less accessible, something our community cannot afford.

Jonathan C. Kinloch is in his first term as a Wayne County commissioner. He is running for reelection this year.