The battle over a provision to regulate interchange rates on debit cards heated up Monday as Sen. Richard Durbin, D-Ill., released a report backing his position, and two House lawmakers launched an offensive to remove it.

Durbin released a report from the Treasury Department that found the federal government is among the largest public sector merchants paying interchange fees. The report said they cost the government more than $116 million on 80 million credit and debit card transactions.

The Treasury could save between $36 million and $39 million in reduced annual interchange fees if it could negotiate more reasonable terms.

The report bolsters Durbin's case for keeping the interchange provision in the regulatory reform bill. The provision would let the Federal Reserve Board ensure debit interchange rates are "reasonable."

Reps. Debbie Wasserman Schultz, D-Fla., and Kenny Marchant, R-Tex., meanwhile, released a letter Monday with the signatures of more than 100 lawmakers urging conferees to drop the interchange provision from the final reform bill.

The lawmakers called the interchange measure "ill-conceived and harmful," saying it would "devastate credit unions and community banks, and harm every consumer that uses debit and credit cards to pay for everyday essentials and large purchases alike."

Calling the provision counterproductive the representatives said it would increase rather than decrease consumer costs. "Simply stated, this amendment hurts our constituents because it will raise the price of basic banking products," said the letter.

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