We already knew that U.S. Representative Barney Frank objects to the Federal Reserve's 12-cent limit in debit card interchange fees, the Fed's attempt to satisfy the requirements of the Dodd-Frank Act's Durbin Amendment. Frank told Maria Bartiromo in December that he didn't see consumers benefiting from this drastic measure. But yesterday, he went a step further, telling Bloomberg reporters that he's actually willing to work with House Republicans to force the Fed to change its proposal.
"If they want to do something on it, I'll work with them," Frank told Bloomberg writers, referring to the Republicans who now control the House's financial services committee.
The article notes that the interchange fee limits could reduce annual revenue for U.S. banks by more than $12 billion. Debit interchange fees totaled $16.2 billion in 2009, according to the Fed. [Bank of America, as we all know, already took a $10.4 billion "goodwill impairment charge" to prepare for the fee restrictions in the third quarter of 2010.]
But if the House Republicans manage to pass a proposal that forces the Fed to change the rules (and no formal bill has been drafted yet that would do this), it would be sure to meet resistance in the Senate, where Senator Richard Durbin of Illinois, author of the Durbin Amendment, has not only defended the 12-cent cap but would like it to apply to credit cards as well.
The article notes that "the interchange issue has created unorthodox battle lines in Congress, with some Republicans who side with large merchants voting for the rules, and Democrats, unconvinced by the argument, voting against."