Attempt to Delay Interchange Debit Fee Provisions Fails in Senate
June 8, 2011 - An attempt to delay the implementation of debit interchange fee regulations failed in the Senate on June 8. The provisions are to take effect on July 21, as part of the Dodd-Frank Wall Street and Consumer Reform Act signed into law last summer. The amendment, offered by Sens. Jon Tester (D-MT) and Bob Corker (R-TN), would have been attached to S. 782, the Economic Development Revitalization Act of 2011, currently being considered by the Senate. The amendment was short six votes for passage.
The amendment would have delayed implementation for a 12 month period so that regulators could further study the issue. In May, NASCUS, along with state bank regulators, expressed their support for additional time to study the impact of the implications associated with this rule, in particular for smaller institutions. The Federal Reserve is expected to release a final rule soon; the proposed rule set a cap of 12 cents on debit card transactions.
NASCUS and state bank regulators expressed to Congress that its inclusion of the smaller issuer exemption recognized a need to protect smaller institutions from potential impact. However, state regulators are concerned that regulations promulgated and taking effect by the law’s deadlines would have unintended negative consequences and would not be able to protect those institutions in the manner that Congress intended.
S. 575, a standalone bill to delay the interchange debit fee provisions, currently has 16 co sponsors in the Senate. There is a similar pending bill in the House, H.R 1081, with 96 co sponsors.