WASHINGTON — One day after introduction of a bill to repeal the new debit interchange cap, supporters of that cap struck back Oct. 13 by calling for an antitrust investigation into whether banks and trade groups are colluding on prices.
"It appears that banks are seeking to justify fee increases after Congress and the Federal Reserve Board recently limited banks' ability to collude with networks to set debit interchange fees," Rep. Peter Welch, D-Vt., wrote in a letter to Attorney General Eric Holder. "Statements made by individual banks and their trade associations raise questions about whether some price increases that have occurred this year have actually been coordinated."
The interchange cap — the result of an amendment by Sen. Dick Durbin, D-Ill., to the Dodd-Frank Act — sets a roughly 26-cent limit on what large banks can charge retailers for a debit transaction. Fees averaged 44 cents per transactio before the cap. Some large institutions have responded with higher customer fees for debit-card use, notably a $5 monthly fee at Bank of America Corp. Meanwhile, the bill offered on Oct. 12 by Reps. Jason Chaffetz, R-Utah, and Bill Owens, D-N.Y. would repeal the interchange cap.
But Welch's letter — co-signed by four other House members — cited statements industry leaders made in May and June as possible signs that the customer fees were coordinated. The statements all included warnings that financial institutions would pass on the costs of an interchange cap to customers.
"There is clearly no problem with banks making independent business decisions based upon the landscape as they see it,” Welch wrote. “Antitrust issues are raised, however, if they are attempting to facilitate group decisions on their prices, terms and conditions."
One opponent of the interchange cap, Richard Hunt, president of the Consumer Bankers Association, dismissed the letter's call for an investigation.
"There are many things one may say about the banking industry. Organized and coordinated would not be on such a list," Hunt said in an email.
The letter was also signed by Reps. John Conyers, D-Mich., Raul Grijalva, D-Ariz., Keith Ellison, D-Minn., and Mike Honda, D-Calif.
