WASHINGTON — Although Senate leaders have confirmed they will allow a floor vote soon on delaying interchange fee restrictions, the timing, outcome and vehicle for suspending the proposed cap are still anyone's guesses.
Senate Majority Leader Harry Reid said publicly this week that the chamber would consider a bill from Montana Democrat Jon Tester, which would push back the restrictions — now due to take effect July 21 — for two years so policymakers could study them further.
Yet any certainty surrounding the bill ends there.
Not only is the timing unknown, but Reid's office has indicated he does not support the delay and most observers believe Tester still lacks the votes needed to stop a filibuster. Additionally, it is still unclear which broader piece of legislation lawmakers will try to join with the bill. While focus has turned to attaching a delay to a reauthorization for the Patriot Act, observers agree that would bring complications.
"For all I know, no decision has been made whatsoever except that [Tester] will get a vote," said Brian Gardner, a political analyst at Keefe, Bruyette & Woods Inc. "'If' has been answered. 'When' has not been answered."
The proposed delay comes as the Federal Reserve Board continues to develop its final rule to curb the debit swipe fees banks charge to merchants. Under an amendment to the Dodd-Frank Act from Sen. Richard Durbin, D-Ill., the Fed must ensure debit interchange fees charged by banks with more than $10 billion in assets are "reasonable and proportional" to processing costs. In December, the central bank issued a proposal that would cap such fees at 12 cents.
But since then, regulators and banks have insisted the $10 billion threshold will not work, and the market will force community banks to face the same restrictions and restraints on revenue. The most dire warning arguably came last week at a hearing when Fed Chairman Ben Bernanke said some community banks could even fail as a result.
Industry representatives said the extent of regulators' warnings has likely given pause to senators who supported the original Durbin measure.
"When Chairman Bernanke, in a much clearer fashion than he has, said the small-bank exemption won't work — that there is good reason to be concerned and it could result in small banks failing — that reinforces the point to members and leads many to reconsider their vote," said Ken Clayton, senior vice president and chief counsel for the American Bankers Association.
But with the election season approaching and a dwindling crop of bills to which Tester's measure could be added, time is not be on the industry's side. Among various options for combining it with other legislation, joining it with a reauthorization of Patriot Act measures has emerged as a top possibility.
Gardner said the Patriot Act has appeared more appealing than other targets such as broader energy legislation. But he noted that the clock is ticking since the homeland security measures must be reauthorized by May 27.
"When you look around for must-do pieces of legislation, you come up with the Patriot Act, which is facing a deadline," Gardner said. "I've heard some people suggest that's a logical place for Tester to go. But I haven't heard anything from leadership that that in fact will be where he gets his vote."
Jason Kratovil, vice president of congressional relations for the Independent Community Bankers of America, agreed that the strategy has obstacles.
"It's going to require some significant agreements among Senate leadership in both parties to find a way to get that to happen. A whole lot of stars have to align for this to happen, really on any vehicle," Kratovil said. "While many in our industry and on our side are maybe hoping for the Patriot Act, because it's considered one of the very few must-pass things that the Senate's going to take up anytime in the near future, … it's a real uphill battle, both politically and procedurally."
Even a spokeswoman for Tester, emailing reporters Wednesday, said, "It is still unclear when/where there will be a vote."
Merchants groups are not convinced floor action is guaranteed.
"We're going forward to prepare but I'm not sure if there is going to be a vote and if there is, when it would be," said Douglas Kantor, a counsel to the Merchants Payments Coalition. "There is a lot of talk about this issue. Whether that means there is a vote or not is entirely unclear."
Meanwhile, most observers believe the Montana senator is still a handful of votes shy of the 60 needed to avert a filibuster.
Gardner said a vote on Tester's bill would likely transcend party lines, making it difficult to predict an outcome, since supporters of the banking and retail industries tend to be on both sides of the aisle.
"This is one of those one-off issues where you can't use the usual markers, the usual telltale signs," he said. "I think Tester is a couple of votes short, and I don't think the fence-sitters are going to jump off the fence until there's an actual vote scheduled. I think they're actually hoping that this goes away and there isn't a vote and they will keep their powder dry until the absolute last possible minute. … They don't want to have to choose between friends."
