Senators Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) today introduced an ABA-backed bill that would delay for two years the Federal Reserve's debit-card interchange price-control rule. The introduction of the bill - S. 575, the "Debit Interchange Fee Study Act of 2011" -- came just as approximately 900 bankers headed to Capitol Hill to lobby for relief from the interchange provision.
The Tester-Corker legislation would void the Fed's proposed rules and extend the deadline for implementing the Durbin Amendment for two years after the bill's enactment.
It also would require the Fed, FDIC, Office of the Comptroller of the Currency and the National Credit Union Administration to jointly submit a report to the Senate Banking Committee and the House Financial Services Committee on the impact of regulating debit interchange transaction fees and related issues not later than one year after the bill's enactment.
In conducting the study, the agencies are directed to examine the state of the debit interchange payment system, including the impact of the DFA's interchange provisions on consumers, businesses that that accept debit cards as payment, all financial institutions that issue debit cards, including small issuers, and debit card networks.
The agencies also would be required to examine the costs -- such as anti-fraud efforts, data breach, financial liability and payment guarantees -- and benefits of debit card transactions and alternative forms of payment for consumers, merchants, issuers and debit card networks. They must also look at whether it is possible to treat small debit-card issuers differently.
ABA, which for months has been working along with a coalition of bank and credit union trade groups to stop the interchange rule, applauded the introduction of the Tester-Corker bill. ABA's President and CEO commented:
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. 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.
Sens. Tom Carper (D-Del.), Pat Roberts (R-Kan.), Chris Coons (D-Del.), Mike Lee (R-Utah), Ben Nelson (D-Neb.), Jon Kyl (R-Ariz.) and Pat Toomey (R-Pa.) are all original co-sponsors.
A similar bill is expected to be introduced soon -- perhaps even later today -- in the House. ABA will soon urge all bank employees to contact their members of Congress to express support for both bills. ABA officials emphasized that the legislation represents an important first step but that in order for the bills to pass, bankers must show an overwhelming amount of support.
Read the Senate bill.
Read the cosponsors' press release.
Read ABA's press statement.