From: WSJ
By Victoria McGrane
For weeks, lobbyists for banks both large and small have been pounding the hallways of the Capitol to complain about a plan to limit the debit card transaction fees banks can charge retailers. They want lawmakers to repeal the provision in the financial law that directed the Fed to write the rule in the first place.
The worn shoe leather is paying off. House Financial Services Chairman Spencer Bachus (R., Ala.) announced Tuesday that his panel will hold a hearing Feb. 17 on the proposal. Before that, liberal Democrat Barney Frank of Massachusetts, for whom the bill is partly named, had announced he wants to work with Republicans on a legislative fix.
But the hearing will likely be a critical first test of whether lawmakers want to reopen this particular can of worms.
The draft rule, issued in December by the Federal Reserve, could cost banks billions in lost fees. Critics warn it is also likely to lead to higher fees on checking accounts and other bank products as banks seek ways to make up for the lost revenue.
The draft rule was a victory for merchants, who’ve tried for years to persuade regulators that banks are overcharging them on these so-called interchange fees, which retailers must pay each time a consumer pays with plastic. The retailers argue that lowering these fees will allow them to lower costs on products for consumers.
The banks are up against some serious challenges in getting the provision repealed. The biggest obstacles are lawmakers, particularly senators, who are reluctant to pick one interest group ally – the banks – over another – the retailers. (The law’s provision originated in the Senate, attached at the last minute and pushed by Sen. Richard Durbin (D., Ill.); the House never took a standalone vote on it.) But there’s a chance that the hearing could impact the Fed as it works to finalize the rule.
Leave a Reply