To the editor:

I really appreciate my local bank and the people who work there. Not only do they provide excellent service, but they are also friends and neighbors. The ability of community banks and credit unions to offer personalized services, community partnerships, and financial education is what makes them especially valuable to our rural communities. Since we value these unique relationships, it is disappointing when our small banks and credit unions consolidate or close. But the simple truth is that they need revenue to stay in business and if certain regulations make that impossible, they may not be able to.

While some regulations might appear well intended, they can often have harmful unintended consequences. Legislation like the 2023 Credit Card Competition Act is an example of this where it would change the process of credit card transactions. In this instance, it would seemingly lower costs by limiting interchange fees, or swipe fees, for credit card transactions. However, while big box retailers would save money on these fees, it would have serious implications for our financial institutions and consumers as these fees pay for services and access that we may overlook and take for granted.

In 2010, the Durbin Amendment placed the same regulatory limits on debit card transactions with the same promise that limiting the transaction fee would allow merchants to save money. They claimed it would lead to consumer savings through retailers being able to lower their prices. However, retail corporations were able to capitalize and benefit from the $106 billion in lost interchange revenue for banks with the majority of consumer prices either staying the same or increasing. Meanwhile, the loss in revenue for financial institutions limited their ability to cover costs, expand services, and maintain financial stability. This created an environment where banking became more expensive and less accessible.

The impact of this legislation was also felt through the increased rate of community banks closing once the Durbin Amendment was passed. While exemptions for small institutions were included in the legislation, they were ultimately proven to be ineffective. The negative unintended consequences were felt industry-wide while hurting communities that have limited access to banking institutions as many rural communities do.

Policies like the Durbin Amendment and the Credit Card Competition Act overlook the dire consequences for credit unions, community banks, and the rural communities they serve. Cutting their revenue would once again lead to limited services, increased fees, and less financial instability. Supporting and strengthening these institutions is crucial to ensure a brighter economic future for everyone.

As a small community, we need to stick together – small farmers, small businesses, and small banks — so that we can all survive and thrive. Therefore, we must contact our Congressional Representatives and Senators to let them know that we care and want our small-town banks to survive.

James Kanne

Franklin