WASHINGTON The Federal Reserve Board yesterday 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.
The Fed’s general counsel, Scott Alvarez, yesterday told U.S. District Judge Richard Leon that the agency would appeal his ruling before redrafting the Durbin guidelines that Leon tossed out last month. Alvarez said the Fed also plans to ask Leon for a longer stay of his ruling to allow the current swipe fee rule to remain in place until the legal process takes its course.
In July, 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 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.
Both CUNA and NAFCU were pleased with yesterday’s decision by the Fed. CUNA, earlier in the week stated that it was hoping for an appeal. “We are relieved to learn the Fed is defending its rule,” said President Bill Cheney. “Although the Fed’s rule is far from perfect for credit unions, the district court’s decision compounds Durbin’s already negative consequences and is the wrong result for consumers. We appreciate that the Fed is prepared to take this issue to the next level, and CUNA will do everything it can to ensure the D.C. Circuit Court of Appeals is aware of credit union concerns as the case moves forward.”
NAFCU offered a similar perspective. “We’re pleased that the Federal Reserve Board has decided to appeal this decision because letting it stand would have a detrimental effect on our credit union members and the consumers they serve,” said Carrie Hunt, SVP of government affairs and general counsel. “We continue to be concerned about existing arbitrary price caps.”
The Fed intends to pursue an expedited appeal to speed up resolution of the matter, and was joined in that move by merchant groups--the National Retail Federation, the Food Marketing Institute and NACS, formerly the National Association of Convenience Stores--the same merchant groups that filed suit against the Durbin rules originally put in place by the Fed.
Hunt, while acknowledging there is no easy way to estimate when and if new rules will be written, said that even with an expedited appeal the shortest new rules or a decision might come out would likely be a year. “Longer if the court encounters issues or takes a long time to come to a decision.”
