TCF Bank Seeks Appellate Order to Block Debit Card Fee Cap
The banking company leading the legal challenge to the Durbin Amendment's cap on debit interchange said Thursday that it sees evidence of progress on other fronts of the battle.
WASHINGTON As Congress continues to struggle over whether to delay a pending Federal Reserve Board plan to cap interchange fees for debit cards, a key question remains unresolved: How far is the central bank prepared to go on its own to modify the rule?
TCF Financial Corp.'s William Cooper is rethinking his long-held belief that economies of scale do not matter in banking.
Bankers upset with a proposal to slash debit interchange fees are lobbying Congress and plotting survival strategies. Only TCF's Bill Cooper has been bold enough to take the Federal Reserve to court.
TCF National Bank has asked a U.S. appeals court for an order that would block federal regulations capping the amount of money the biggest U.S. banks can charge retailers for processing debit-card transactions.
The bank, a unit of TCF Financial Corp. of Wayzata, Minnesota, that sued Federal Reserve Chairman Ben S. Bernanke, is challenging U.S. District Judge Lawrence L. Piersol’s April 4 decision denying its request to halt implementation of the rule.
The lender challenges legislation appended to last year’s Dodd-Frank financial regulation overhaul bill. The provision, sponsored by U.S. Senator Richard Durbin, an Illinois Democrat, and known as the Durbin Amendment, bars banks with more than $10 billion in assets from collecting from retailers more money for debit-card transactions than the actual cost of providing that service.
“We are talking about the establishment of a confiscatory rate regime fully 15 years after banks began their debit businesses,” TCF’s attorneys argued in their brief filed today with the St. Louis-based U.S. Court of Appeals.
Matt Miller, a Justice Department spokesman, didn’t immediately return a call seeking comment.
TCF has argued that the proposed fee cap, which isn’t yet in force, is unconstitutional.
After an April 4 hearing in Sioux Falls, South Dakota, Piersol denied the bank’s motion to stop the rule on rates. The judge also denied a government request to dismiss the case outright.