Signs of Progress: Bills to Delay Interchange Rule Introduced
US Banker | March, 2011
WASHINGTON — The banking industry saw the first tangible signs of progress Tuesday in its fight to overturn the Durbin amendment, as House and Senate lawmakers officially introduced bills that would delay implementation of a plan to restrict interchange fees on debit cards.
Sen. Jon Tester, D-Mont., is seeking a two-year delay while regulators study the costs of the rule, which was required by the Dodd-Frank Act. Rep. Shelley Moore Capito, chairman of the House financial institutions subcommittee, is seeking a one-year delay with more input from the federal banking agencies.
Whether either the legislation can be enacted is unclear, but analysts said the industry is gaining ground.
"The industry is making progress," said Jaret Seiberg, an analyst with MF Global Inc.'s Washington Research Group. "We have legislation on both sides of the Capitol now but the finish line is still far away."
In a conference call with reporters, Tester said he senses growing support from both political parties. He has already attracted some bipartisan co-sponsors, including Republican Sens. Bob Corker of Tennessee and Pat Roberts of Kansas as well as Sen. Ben Nelson, a Nebraska Democrat who originally voted to support the Durbin amendment last year.
"We've already heard from people in the Senate who voted for the Durbin amendment that want to take a good look at my bill to see if it was possible to support it," Tester said. "This isn't a repeal. This is a stop and study and I think that's the right direction to go."
But with Sen. Richard Durbin, D-Ill, dead set against any delay to his provision, Tester faces an uphill battle. Some industry estimates said bankers still need to win the support of at least 10 more lawmakers to get the 60 necessary to ensure its passage.
Tester said he is hopeful he can win enough votes, pointing to recent comments from Federal Reserve Board Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair who warned the rule could hurt small banks despite an ostensible exemption for institutions with less than $10 billion of assets. "I think we have a real chance to get 60 because this is not a repeal," Tester said. "It's a delay and study and I think more information is always better as you move forward, especially considering Bernanke and Bair... Is it going to be difficult to get passed? Absolutely, it's going to be difficult. We need to have everybody pull in the same direction."
Durbin warned Tuesday he would fight any attempt to delay enactment and described interchange fees as a "bailout" of big banks.
"Every month we delay limiting the amount banks and credit card companies charge merchants means another $1.3 billion bailout for Visa, MasterCard and their big bank allies," Durbin said in a press release. "The $13 trillion banking industry doesn't need another handout — especially one paid for by small business and American consumers. I will strongly oppose any attempts to line the pockets of the credit card giants and Wall Street banks by delaying this common sense, pro-consumer legislation."
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