WASHINGTON The two credit union trade associations have joined with a number of other financial industry representatives to file a supplemental briefing in the lawsuit over Dodd-Frank’s debit interchange provisions.
Credit unions and others have filed the brief in support of the Federal Reserve, which has appealed the recent court ruling that calls for the debit swipe fee cap to be invalidated, a move some experts say could keep the current interchange guidelines in place for at least a year before any new rulings are made.
In July, Judge Richard Leon struck down the 21-cent debit interchange cap for FIs with more than $10 billion in assets which could rise to as high as 24 cents depending on certain circumstances and ordered the ceiling to remain in place until new regulations or interim rules are written. Leon ruled the Fed did not do enough to limit the fees and set the cap too high, allowing banks to overcharge merchants.
CUNA, NAFCU and other parties have built their brief around three points:
* There is no legal basis for the court to order an independent agency to draft an interim rule. Under Supreme Court and D.C. Circuit precedent, only the Fed can determine whether and when to issue any such rule, the brief states.
* Regardless, the court should not require an interim rule. A rush to issue a new, temporary rule will harm all affected interests, including consumers, and threaten the effective functioning, stability, and security of the electronic debit-card payments system.
* Any order requiring the Fed to issue an interim rule almost certainly will result in more litigation, further muddying the regulatory landscape in an area where parties need certainty.
For these reasons, the financial institution coalition has asked the court to keep the current Fed regulation in place pending the Fed's appeal.
“Interchange is an enormous issue for credit unions and an interim or expedited rule could have devastating effects on credit unions ability to serve their 96 million members,” said NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt. “Ultimately, consumers will pay the price if there is unpredictability in the marketplace.”
