Legislative Waiting Periods: Senators Propose Two-Year Delay Before Implementing Dodd-Frank Debit Card Fee Changes

March 16th, 2011

I previously noted that Dodd-Frank, a predictable response to the Black Swan that was the recent financial crisis, would have a number of unintended consequences (Todd Zywicki has been on top of this for some time). One of our proposed solutions to preventing such black swan laws was legislative waiting periods.

Before legislatures can pass laws, a legislative cooling off period should be in order. If people need cooling off periods before buying a gun and doing something stupid with it, legislatures should need a cooling off period before hastily ramming through a law. Any bill introduced in either house cannot be voted on for X months. If it’s that important, it can wait. If there is some type of exigency, emergency legislation can be passed right away, but it is only effective for Y days, and must be renewed by a supermajority every Z days (kind of like the War Powers Act). Frankly laws of this magnitude often take months, and even years to be implemented. There are countless rulemakings that need to occur. In some cases, waivers are given to delay any inconveniences for years. Waiting a few months before passing the bill won’t change anything. I’m sure with more deliberation time, the law can only be improved. Congress would be well served to move with all deliberate speed. (Yes we recognize the constitutional infirmities of this approach, but we’re just theorizing here.)

Well Dodd-Frank was already signed into law, so a pre-enactment waiting period would not quite work now. But 9 Senators are proposing a similar remedy–a post-enactment waiting period to assess the impact of this new law. From the New York Times, an article titled 9 Senators Seek to Delay Debit Card Fee. Changes:

A bipartisan group of senators introduced a bill on Tuesday that would delay a new federal regulation to lower the swipe fees that banks could charge merchants for processing debit card transactions. . . .

The latest bill, introduced Tuesday by nine senators led by Senator Jon Tester, a Democrat from Montana, calls for a two-year delay and a one-year study during that period of the effect of the proposed limits on debit fees. . . .

“I think there is a little bit of buyers’ remorse as I talk to senators in the hallway,” Mr. Tester said.

Legislative waiting periods. These just may catch on.