WASHINGTON—The banking industry saw the first tangible signs of progress March 15 in its fight to overturn the Durbin amendment, as House and Senate lawmakers officially introduced bills that would delay implementation of a plan to restrict interchange fees on debit cards.
Sen. Jon Tester, D-Mont., is seeking a two-year delay while regulators study the costs of the rule, which was required by the Dodd-Frank Act, while Rep. Shelley Moore Capito, chairman of the House financial institutions subcommittee, is seeking a one-year delay with more input from the federal banking agencies.
Whether either bill can be enacted is unclear, but analysts say the industry is gaining ground.
“The industry is making progress,” says Jaret Seiberg, an analyst with MF Global Inc.’s Washington Research Group. “We have legislation on both sides of the Capitol now, but the finish line is still far away.”
During a conference call with reporters, Tester said he senses growing support from both political parties. He already has attracted some bipartisan co-sponsors, including Republican Sens. Bob Corker of Tennessee and Pat Roberts of Kansas, as well as Sen. Ben Nelson, a Nebraska Democrat who originally voted to support the Durbin amendment last year.
“We’ve already heard from people in the Senate who voted for the Durbin amendment that want to take a good look at my bill to see if it was possible to support it,” Tester said. “This isn’t a repeal. This is a stop and study, and I think that’s the right direction to go.”
But with Sen. Richard Durbin, D-Ill, dead set against any delay to his provision, Tester faces an uphill battle. Some industry estimates says bankers still need to win the support of at least 10 more lawmakers to get the 60 necessary to ensure its passage.
Tester said he is hopeful he can win enough votes, pointing to recent comments from Federal Reserve Board Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair that warned the rule could hurt small banks despite an ostensible exemption for institutions with less than $10 billion of assets.
“I think we have a real chance to get 60 because this is not a repeal,” Tester said. “It’s a delay and study, and I think more information is always better as you move forward, especially considering Bernanke and Bair. ... Is it going to be difficult to get passed? Absolutely, it’s going to be difficult. We need to have everybody pull in the same direction.”
Durbin warned March 15 he would fight any attempt to delay enactment.
“Every month we delay limiting the amount banks and credit card companies charge merchants means another $1.3 billion bailout for Visa, MasterCard and their big bank allies,” Durbin said in a press release. “The $13 trillion banking industry doesn’t need another handout, especially one paid for by small business and American consumers. I will strongly oppose any attempts to line the pockets of the credit card giants and Wall Street banks by delaying this common sense, pro-consumer legislation. ”
For their part, industry representatives acknowledge they have a tough road ahead but says they were pleased bills were now in play.
“Having a bill introduced in the Senate with strong bipartisan cosponsorship is one more step in what is clearly a demonstration of growing concern on the Hill about the negative impact of the proposed rule,” says Floyd Stoner, the chief lobbyist for the American Bankers Association. “This is going to be one step at a time.”
Richard Hunt, president of the Consumer Bankers Association, also is cautiously optimistic.
“The chances are certainly better than they were two months ago, but it’s still an uphill climb,” Hunt says. “We’re working every day to educate members. There are members of the Senate who are going to vote yes for delay but may not sign on for cosponsors.”
The situation in the House is clearer. Although Capito’s bill does not yet have Democratic support, Rep. Barney Frank, D-Mass., is said to be interested in making some changes to the interchange provision. While House Financial Services Committee Chairman Spencer Bachus likely has support to pass a bill delaying the interchange rule, the Alabama Republican has said he wants to wait for the Senate to act first.
Under Capito’s bill, the Fed would have to make changes to its December proposal, which would cap debit interchange rates at 12 cents, if at least two of the four banking and credit union regulators agreed additional costs should be considered as part of the plan.
Since the Fed released its proposal, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. officials have raised concerns with the plan’s potential impact, saying it could harm banks of all sizes.
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