Durbin defends interchange fee rule

A bipartisan group of seven senators introduced legislation today that calls for the debit card fees for two years, essentially killing any chance for implementation.

Led by Sen. Jon Tester (D-Mont.), the lawmakers are pushing a bill that would delay the provision included in the Dodd-Frank financial reform law that would drastically limit the amount banks can charge retailers for swiping debit cards.

The bill would require the Federal Reserve to stop writing rules implementing the measure, and call for a two-year study examining the impact of the provision on consumers, businesses and banks.

Tester, a member of the Senate Banking Committee, said the stakes are “simply too high to move forward without a closer look at the impact.”

The Tester bill won the backing of banking groups and the disdain from retail groups over what has been, at best, prickly issue. 

“This amendment is a slap in the face for small business owners and consumers across the country,” said Lyle Beckwith, senior vice president of government relations for the National Association of Convenience Stores.

Meanwhile, the American Bankers Association praised the legislation saying the Fed should “reconsider the harmful unintended consequences that will result from the Federal Reserve’s proposal to implement the Durbin amendment.”

“The legislation introduced by these senators today rightly recognizes that the Fed’s rule will cause significant and immediate harm to community banks, consumers and the broader economy,” said Frank Keating, ABA’s president and chief executive in a statment. 

He said “various concerns” over the Fed’s proposal have been raised in recent weeks by bank regulators, including Fed Chairman Ben Bernanke and Sheila Bair, chairman of the Federal Deposit Insurance Corporation, and by numerous lawmakers in both parties.

“The clear implication is that more time to study the impact of this provision is definitely warranted, especially considering that the Durbin amendment was adopted at the 11th hour, without hearings, committee action or informed debate,” he said.