Wayzata, Minn.-based TCF National Bank announced Tuesday it is suing the U.S. Federal Reserve to block new limits on debit-card transaction fees, one of the first lawsuits against a major provision of the Dodd-Frank financial overhaul law, reports Dow Jones.
In its complaint, TCF National Bank argues that the law's prescribed debit card rules are unconstitutional because they will prevent TCF from making a reasonable rate of return on invested capital. The bank, which has $17 billion in assets, also claims that the law discriminates against it because it exempts financial institutions with less than $10 billion in assets.
TCF said it will file its complaint Tuesday in a U.S. District Court in South Dakota. TCF, which is chartered in South Dakota, has more than 440 branches in eight states.
At issue is a controversial amendment to the financial regulation law sponsored by Sen. Richard Durbin, D-Ill., that targets the "interchange fees" merchants pay debit card-issuing banks every time a cardholder swipes a debit card. Under Durbin's language, the law directs the Fed to write rules limiting banks to charging debit-related fees to retailers that are "reasonable and proportional" to the actual cost incurred by the bank.
TCF has chosen to file its lawsuit before the Fed has written the rules ordered by the Dodd-Frank law, a move that could make it more difficult for the firm to have early success in court.
