Frank Backs Effort To Delay Dodd-Frank Debit Fee Rule
First Published Wednesday, 6th April 2011 12:22 am - © 2011 Dow Jones
(Adds Consumer Bankers Association president comments in eighth paragraph, and Sen. Durbin comments starting in 11th paragraph.)
By Maya Jackson Randall
Of Dow Jones NEWSWIRES
WASHINGTON -(Dow Jones)- Rep. Barney Frank (D., Mass.) announced Tuesday he would like to amend a controversial provision of the sweeping Dodd-Frank financial law he co-authored that would limit banks' processing fees.
He made clear that his intent is to protect the rest of the financial package, calling the debit card fee regulations "the only part of the financial reform bill that needs to be amended."
Lawmakers in the House and Senate have introduced bills that would delay the Federal Reserve's upcoming rule to curb the bank fees, arguing that more time is needed to study the regulation's impact on small banks and consumers. Even though proponents of the bill have a high hurdle to overcome in the Senate, where they would likely need at least 60 votes, the effort to delay the Fed rule is one of the most successful attempts to roll back Dodd-Frank yet.
And now, Frank, a key architect of the law, is endorsing that effort.
In the wake of news last week that the Federal Reserve wouldn't be able to meet its April 21 deadline to issue a final rule on the fee limits, Frank said he believes Congress should step in and postpone the deadline for the Fed to issue a rule on interchange fees.
"The Federal Reserve's announcement that they cannot meet the deadline on interchange fees confirms my view that this is the only part of the financial reform bill that needs to be amended," Frank said in a statement. "For this reason, I support legislative action to postpone the deadline so that we can revisit it."
A retail banking industry group applauded Frank's support for legislation to delay the interchange rule.
"It is encouraging to see bipartisan support for a delay," said Consumer Bankers Association President Richard Hunt.
Still, the Senate is where the key battle will take place. The provision to rein in the debit-card processing fees has a powerful supporter in Sen. Richard Durbin (D., Ill.), the second-highest ranking Democrat in the Senate. He has vowed to try to fend off any efforts to delay the rules, which he says would help small retailers and add transparency to the broken interchange fee system.
In fact, the provision to limit the bank fees is dubbed the Durbin amendment--it was Durbin who spearheaded efforts to include the provision in Dodd-Frank. The provision requires the Federal Reserve to rein in the debit-card processing fees banks and credit unions charge retailers, marking a victory for merchants that have fought hard to limit the fees, which they pay financial firms each time a consumer swipes a debit card at the cash register. But the financial industry has aggressively attacked the provision as government price-fixing. Banks warn that the regulation will prompt them to hike various banking fees to recoup billions of dollars of lost fee revenue.
Still, Durbin said Tuesday that a delay in the Fed's interchange rule would be "a serious mistake for consumers and businesses" across the country.
He added that he thinks the Fed can issue a rule that is fair for merchants and banks and benefits consumers.
"I think they can strike a balance and make certain these banks receive what is reasonable and proportional but not the overcharge that they currently have on the interchange," Durbin said after a Senate hearing.
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-6687, firstname.lastname@example.org
--Jeffrey Sparshott contributed to this story.