Merchants, the Fed and industry lobbyists testified in court on the implementation of the Durbin Amendment, which sets a ceiling on interchange fees that larger banks can charge merchants. The Fed first proposed a 12 cent cap and then changed it to 21 cents in the final rule.
The questions judge Richard J. Leon, of the U.S. District Court for the District of Columbia, posed "went to the heart of the controversy: whether the Fed appropriately considered the proper costs to issuers in setting the cap, as directed by Congress," writes American Banker's Victoria Finkle.
An attorney for the Fed explained that it "decided to incorporate additional costs into its calculations after taking comments on the proposed rule, noting the practical difficulties of assessing which costs were appropriate to consider," reports Finkle.
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