Study: Durbin Amendment Threatens Georgia Banks, Economic Recovery

Regulations make it Harder for Banks of all Sizes to Lend

ATLANTA--()--Federal regulations that cap the fees paid for debit card transactions will harm the ability of Georgia’s banks and credit unions to lend to businesses and could hamper the state’s economic recovery, according to a new study by the Competitive Enterprise Institute for the Georgia Public Policy Foundation.

The Durbin Amendment within the Dodd-Frank Wall Street Reform and Consumer Protection Act limits the "interchange" fees that banks and credit unions charge retailers for debit card transactions. This harms Georgia in particular because many banks were already struggling to survive souring mortgage loans, according to the study, "Government Barriers to Georgia’s Growth: How Dodd-Frank Price Controls Poach the Peach State’s Prosperity."

Georgia, where unemployment remains around 9 percent, was especially hard hit by the recent recession and has seen more bank failures than any other state in the nation: Since 2008, the Federal Deposit Insurance Corporation has closed at least 80 of the state’s banks.

The study traces the link between the health of banks and the local economy, citing the parallel rise of Trust Company of Georgia, SunTrust’s predecessor, and Coca-Cola, as well as The Home Depot and First Atlanta bank. Both companies sought out local banks to fuel their growth.

"Historically, commercial banks in the South have played a significant role in financing the economic development of the region," said Thomas D. Hills, a former Georgia state treasurer and chief financial officer under Gov. Sonny Perdue who was quoted in the study.

Economist John Berlau, Senior Fellow for Finance and Access to Capital at the Competitive Enterprise Institute and author of the study, echoed Hills’ sentiments: "Without healthy banks with money to lend, it will be much harder for local entrepreneurs to find the funding they need to grow their business. Georgia’s banks were already weakened by the recent, harsh recession. New regulations coming out of Washington, like the Durbin Amendment, are making it even harder for the banks to recover and do their part to kick-start the state’s economy."

The study notes that the Durbin Amendment alone will cost banks $8 billion in reduced revenue due to lower interchange fees, in addition to $7 billion in direct compliance costs from the rest of the Dodd-Frank Act. "And contrary to claims of proponents of these price controls, it does not look like much of this retailer windfall has been passed on to consumers," it adds.

"This is a bad time for Washington to burden businesses with more regulations," said Kelly McCutchen, president of the Georgia Public Policy Foundation. "The Durbin Amendment has already hurt small and large banks, and it isn't helping consumers. It should be repealed before it does any more harm to the businesses that rely on them for loans and lines of credit to make payroll, open new locations and hire more employees."

The full study is available on the Georgia Public Policy Foundation website.

About the Georgia Public Policy Foundation: Established in 1991, the Foundation is an independent, state-based think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. The Foundation’s regular events include Leadership Breakfasts and Policy Briefing Luncheons. Weekly publications are the Friday Facts and Friday Idea commentaries. Visit to read about innovative solutions to the state’s challenges or to watch streaming online video of Foundation events. Join the Foundation’s Facebook Fan Page or follow us on Twitter at

About the Competitive Enterprise Institute: The Competitive Enterprise Institute ( is a non-profit public policy organization dedicated to advancing the principles of limited government, free enterprise and individual liberty. Founded in 1984, CEI has grown into an effective advocate for freedom on a wide range of critical policy issues, including energy, environment, business and finance, technology, telecommunications, and food and drug regulation.


for Georgia Public Policy Foundation
Benita Dodd, 404-256-4050

Release Summary

A new Georgia Public Policy Foundation study finds that the Durbin Amendment will harm the ability of Georgia’s banks to lend to businesses and could hamper the state's economic recovery.


for Georgia Public Policy Foundation
Benita Dodd, 404-256-4050