WASHINGTON — Federal Reserve Chairman Ben Bernanke notified Congress last week that the Fed will not be able to meet an April 21 deadline for approving a final rule on debit fees, but said it still expects to meet a July 21 implementation deadline.
The Fed Chairman told House Financial Services Chairman Spencer Bachus of Alabama in a letter that the complexity of the rule, combined with sorting through more than 11,000 public comments on the proposal, makes it impossible to finalize a rule by April 21, the deadline mandated in the Wall Street reform bill. The bill also mandates a July 21 implementation deadline.
Credit union trade associations expressed support for the delay, saying it allows for "much-needed time" to consider many concerns raised about the new law. CUNA said it will provide the Fed time to "develop rules that will ensure the outcome Congress intended for consumers and issuers, as well as for merchants."
However, CUNA and NAFCU said the delay creates a new problem — the final rule will now be issued much closer to the July 21 implementation date. "We are very concerned there will be insufficient time for institutions, networks, and the marketplace to prepare for compliance with the final rule," said CUNA CEO Bill Cheney.
The Fed's delay comes as members of both the House and Senate are beginning to debate bills that could delay a final rule for as long as two years.
The chief sponsor of a Senate bill to delay the interchange rule for as long as two years maneuvered to ease passage of the controversial measure by attaching it to popular legislation on small business investment.
It was unclear when the amendment will be voted, but backers of the interchange delay believe their best bet to move the bill is by attaching it to another bill likely to pass.
Either way, the delay effort is expected to be filibustered by Illinois Democrat Dick Durbin, the chief sponsor of the interchange provision, which means a vote to delay the interchange rule will require 60 Senate votes.
Backers of a delay hope to convince Congress to suspend the rules to cap interchange fees on debit cards for as long as two years while the complicated fee proposals, including a two-tiered system, are studied.
