Local Opinion: Congress must focus on policies that help Latinos, not hurt them

The following is the opinion and analysis of the writer. Hernandez is president of the Sunnyside Unified School District Governing Board and a candidate for the Arizona House of Representatives in LD 21:

The positive impact that Latino communities have on the U.S. should be celebrated. We have over 5 million small businesses that contribute a collective $800 billion to the American economy every year. More than 60 million of us work, attend school, raise our families and give back to our communities here.

We deserve to have a voice on the issues that affect us, especially when these issues will impact our access to banking and financial resources.

CNBC reports that Hispanic Americans are paying nearly three times as much as white Americans to keep their bank accounts open, and Brookings Institution data shows that 32% of Latino Americans are either unbanked or underbanked. This is a significant barrier to financial stability. And a serious issue that could affect many in our communities. Congress should focus on economic policies that will help us build wealth and access the banking services that modern life requires.

I am specifically concerned about certain harmful legislative policies that are making their way back to the Senate floor. Twelve years ago, Congress passed the Durbin Amendment, which added regulations to interchange fees, the fees merchants pay to process debit and credit card transactions in their stores. The fees help keep our massive electronic payment system up and running and fund crucial features like fraud protection.

The Durbin Amendment added multiple debit regulations that took billions out of our electronic payment system, regulations that they’re now trying to extend to our credit system.

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First, the amendment imposed a routing mandate, which forced banks to add an additional “unaffiliated” payment network to their debit cards. This meant that instead of always processing debit card transactions on the reliable payment networks they know, merchants were free to choose a cheaper network that is rarely the most secure.

The Durbin Amendment also placed a cap on the interchange fees that merchants pay per transaction. Naturally, massive retailers saw major cuts to the amount they paid in interchange fees and gained nearly $100 billion in extra revenue. Yet studies show this has had little to no impact on their prices for consumers. This is because it is never truly passed down to us, the consumers. These big corporations make more money while we pay more.

Proponents of the Durbin Amendment will argue that it helped marginalized consumers, but we can look at numerous studies from Harvard University, the Government Accountability Office, and the U.S. Federal Reserve and know that this is not the case. Interchange fee revenue helps to pay for perks like rewards programs and fraud protection while allowing banks to keep account fees low and free checking accessible. When banks saw billion-dollar interchange fee losses, they made huge cuts to all of the above, contributing to a total consumer loss of between $22 and $25 billion.

Losses of this scale always hit financially marginalized Americans the hardest, and the fallout from the Durbin Amendment was no exception. More than 1 million people lost their bank accounts after this amendment made banking more expensive, according to a study from George Mason University. The people hurt came primarily from Black and Brown communities and low-income areas that already face disparities in banking access.

On top of hurting consumers, the Durbin Amendment is bad for our small businesses. This is why folks from national Latino advocacy groups like the Latino Coalition and the U.S. Hispanic Chamber of Commerce have spoken out against it. Hispanic Chamber President Ramiro Cavazos even wrote a letter to the Senate Judiciary Committee this year pointing out that the 2010 routing mandates caused, “roughly two million Hispanic small businesses to see price increases as a result of the original regulation American consumers.”

Extending routing mandates to credit cards is the wrong choice for Latino consumers and our small businesses. Our electronic payment system will be gutted, banks will lose billions, and try to make up those losses by raising interest rates and fees, reducing rewards programs and restricting credit access. Congress should reject any policies that will restrict credit access from Latinos.