Sens Nelson and Sessions sign on to Interchange legislation; as do Reps. Hastings and Rivera
03/30/2011 10:59 am
Sens. Bill Nelson (D-FL) and Jeff Sessions (R-AL) became the latest of the 16 co-sponsors of S. 575. This bipartisan legislation would allow Congress to stop and study the impact of regulating debit interchange transactions fees. Specifically,
S. 575 would require the Federal Reserve Board, the FDIC, the OCC, and the National Credit Union Administration (NCUA) to study the impact of regulating debit interchange transaction fees on consumers, debit card issuers, merchants, and the payments networks, and to jointly submit a report to Congress within one year. In addition, the legislation would delay the implementation date for the Fed’s rule for two years to give Congress time to consider the findings of the joint regulatory study. In the House, the stop-and-study bill (
H.R. 1081) now has
59 cosponsors including co-sponsors Reps. Debbie Wasserman Schultz (D-FL), Alcee Hastings (D-FL), Jo Bonner (R-AL) and David Rivera (R-FL).
When Congress approved the Dodd-Frank Act last year, it contained an amendment by Senator Richard Durbin (D-IL) that resulted in the Federal Reserve setting price controls on debit card interchange transactions. The Fed was directed to determine a “reasonable and proportional” fee for a merchant’s use of the debit card payment network, considering only certain “incremental costs” of clearing a specific transaction. There is no consideration of the overall costs to maintain/improve the U.S. payments system, the costs of fraud, and the need for return on capital, among other things. The Durbin amendment aimed to shift the cost away from big box retailers and merchants to consumers, and the Fed recently proposed a very narrow rule that has exactly that effect. The Durbin amendment was an unrelated amendment added at the 11th hour to the Dodd-Frank Act without the benefit of any Senate hearings, study, or informed debate on it. In passing the amendment, Congress imposed a law that will really harm consumers, the economy, and financial institutions of all sizes, including credit unions.
For more information on Debit Interchange legislation, visit the
LSCU Press Room.