Senate Showdown Looms Over Interchange

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WASHINGTON – Senator Jon Tester will introduce a bill later today that would delay implementation of the controversial rule on debit interchange for as long as two years while NCUA and bank regulators study its impact on credit unions and community banks, with a similar bill to be introduced later in the House.
The Montana Democrat’s bill sets up a showdown with Assistant Senate Majority Leader Richard Durbin, the Illinois Democrat responsible for the interchange amendment in last year’s Wall Street reform bill. Durbin’s intransigence on the issue means that supporters of the delay will probably need 60 Senate votes to overcome a Durbin filibuster–a steep requirement because Durbin’s interchange amendment easily passed the Senate last spring by a 64-to-37 vote. 
A separate bill being drafted in the House would also delay the interchange rule but for a year, not two, while regulators, including the Federal Reserve, NCUA, FDIC, Office of Thrift Supervision, and the Office of the Comptroller of the Currency study two aspects of the provision: the costs associated with debit transactions and the effect of the Fed’s proposal on consumers, merchants and card issuers, and the network exclusivity and routing reqirements.
The two bills come as time is running short to stop the interchange amendment, as the Fed is required to approve a final rule by April 21 and implement it by July 21.
Credit unions and banks have mounted opposition to the rule–engineered by the powerful merchants lobby–which would cap fees on debit interchange to as little as 12 cents per transaction and open the debit market to new competition by setting new requirements for routing and network exclusivity.

The stakes in the battle are enormous, with merchants paying credit unions and banks $20 billion a year in debit interchange, some $2.5 million alone to credit unions. 

WASHINGTON – Senator Jon Tester will introduce a bill later today that would delay implementation of the controversial rule on debit interchange for as long as two years while NCUA and bank regulators study its impact on credit unions and community banks, with a similar bill to be introduced later in the House.

The Montana Democrat’s bill sets up a showdown with Assistant Senate Majority Leader Richard Durbin, the Illinois Democrat responsible for the interchange amendment in last year’s Wall Street reform bill. Durbin’s intransigence on the issue means that supporters of the delay will probably need 60 Senate votes to overcome a Durbin filibuster–a steep requirement because Durbin’s interchange amendment easily passed the Senate last spring by a 64-to-37 vote. 

A separate bill being drafted in the House would also delay the interchange rule but for a year, not two, while regulators, including the Federal Reserve, NCUA, FDIC, Office of Thrift Supervision, and the Office of the Comptroller of the Currency study two aspects of the provision: the costs associated with debit transactions and the effect of the Fed’s proposal on consumers, merchants and card issuers, and the network exclusivity and routing reqirements.

The two bills come as time is running short to stop the interchange amendment, as the Fed is required to approve a final rule by April 21 and implement it by July 21.

Credit unions and banks have mounted opposition to the rule–engineered by the powerful merchants lobby–which would cap fees on debit interchange to as little as 12 cents per transaction and open the debit market to new competition by setting new requirements for routing and network exclusivity.

The stakes in the battle are enormous, with merchants paying credit unions and banks $20 billion a year in debit interchange, some $2.5 million alone to credit unions.

 

 

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