After the Durbin Amendment to the Dodd-Frank Act limited the debit card swipe fee charged to retailers, Home Depot lowered prices for its customers.
At one store, financial regulation is helping customers in a demonstrable way.
Home Depot has lowered the prices of more than 3,000 products after regulators started enforcing a cap on debit card swipe fees in October, American Banker reports. Home Depot's decision lends credence tothe argument that retailers are likely to pass on the savings from the Durbin Amendent on to consumers.
"The money saved [by] Durbin goes into the pool of savings, lowers our overall operating costs, and allows us to reinvest in the business to lower prices," Dwaine Kimmet, Home Depot's treasurer and vice president of credit, said in an interview with American Banker. "We have absolutely lowered prices...[but] what I can't do is draw that direct correlation to Durbin."
Clarification: This article has been updated to include Kimmet's full quote that was published in American Banker and the number of items that Home Depot sells in its stores.
The Durbin Amendment, which went into effect on October 1, cuts the maximum debit card swipe fee charged to retailers in half. Before the bill, retailers were paying an average of 44 cents for every debit card transaction. Now, the Federal Reserve is enforcing a limit of 21 cents per transaction and 0.05 percent of the transaction, as well as an extra penny for card issuers with fraud-prevention standards, according toFox Business.
The banking industry has been charging new fees to try to make up for their lost revenue from the Durbin Amendment. Banks argue that the Durbin Amendment forces them to have no choice but to charge customers more fees, while retailers saythat higher debit card swipe fees in the past forced them to raise prices above their true value.
MADRID -- Spain's key borrowing rate hit a fresh high Thursday not seen since the country joined the euro in 1999, after a credit ratings agency downgraded the country's ability to just above junk status amid rising fears a bank bailout may not be enough to save the country from economic chaos.
The interest rate – or yield – on the country's benchmark 10 years bonds rose to a record 6.96 percent in early trading Thursday, close to the level which many analysts believe is unsustainable in the long term and the rate that forced Greece, Ireland and Portugal to seek bailouts of their public finances.
The ratings agency Moody's downgraded Spain's sovereign debt three notches from A3 to Baa3 Tuesday night, leaving it just one grade above "junk status".
Moody's said the downgrade was due to the offer from eurozone leaders of up to (EURO)100 billion to Spain to prop up its failing banking sector, which the ratings agency believes will add considerably to the government's debt burden.
The lowered score means that even fewer investors will buy Spanish debt, because organizations like pension funds are mandated to avoid assets with such low creditworthiness.
Spain won't immediately collapse if the rate hits 7 percent, but reaching that point would affect Spain next week when it is scheduled to auction debt.
"The clock is definitely ticking," said Michael Hewson, an analyst with CMC Markets.
The bank bailout is intended at recapitalizing the Spanish banking system and calming Europe's debt crisis. Instead, investors seem unnerved by the government taking on extra debt and have pushed Spanish bond yields – a measure of market jitters – higher all week.
Moody's said the Spanish government's ability to raise money on global markets was being hindered by high interest rates, a situation which had led it to accept eurogroup funds to recapitalize debt-burdened banks.