WASHINGTON – The credit union and banking lobbies were pulling out all the stops last night to round up a few more votes for their bid to delay cuts in debit fees, but the effort was still a handful of votes short.
NAFCU told Senate leaders the issue was not one of a “bailout” or “hand-out” to big banks, as Illinois Senator Richard Durbin insisted during yesterday’s debate, and urged senators to support a new version of the delay.
The new version, proposed by Montana Democrat Jon Tester and Tennessee Republican Robert Corker, would delay the rule for as long as two years while a panel of regulators studies the matter and allows broader expenses be included in defining the allowable costs in setting debit fees. Corker told his Senate colleagues the new proposal, which he labeled a compromise, still will result in government regulation of the debit market.
The proposal would give the regulators six months to study the debit market, another six months to pas a new rule, but does not give a deadline for implementation, which could be as much as a year after that.
But Durbin responded by saying the proposal is not a compromise, as Tester and Corker assert, but the same two-year delay they originally proposed.
Several sources told Credit Union Journal last night they believe Tester and Corker have not attracted the necessary 60 votes to overcome a filibuster by Durbin on the amendment, which is scheduled to be voted at 2 p.m. Eastern Time this afternoon.
The stakes in the fight are enormous, with credit unions and banks earning an estimated $20.5 billion in debit fees last year, $2.6 billion of which went to credit unions.
California Democrat Barbara Boxer displayed a chart showing that the U.S. has the highest debit fees in the world, 1.14% of every transaction, compared to just 0.20% in Europe and zero in Canada, and said she will vote against delaying the debit cuts.
If Congress does not delay the debit rules the cuts, as much as 75% of current rates, will go into effect July 21. Most credit unions and banks are exempt from the cuts, but industry lobbyists insist they will be affected anyway because the market forces of cuts on the biggest card issuers will force them to lower their fees as well.
If Congress declines to delay the rule, credit unions and banks still have one more card to play, a court challenge to the rule being waged by TCF Bank of Minneapolis, which is supported by CUNA, NAFCU, the banking groups, and Visa and MasterCard.
