A battle over fees banks charge merchants for debit cards intensified Wednesday after Democratic Senator Jon Tester maneuvered for quick action on his legislation imposing a two-year delay for new government rules.
Tester's amendment to a small business bill being debated in the Senate would put off rules proposed by the Federal Reserve, which would cap the fees at about 12 cents per transaction — a 75 percent cut.
The cap, required under last year's Dodd-Frank financial reform law, is opposed by card networks Visa Inc. and MasterCard Inc., as well as big banks such as Citigroup and JPMorgan Chase & Co. Industry lobbyists have been working hard to block it.
Tester has said more time is needed to study the rule.
He and other backers of the measure face an uphill battle to even schedule a Senate vote on the debit card fee amendment.
Senate Majority Leader Harry Reid is already struggling with demands for votes on other controversial amendments to the small business bill, including measures to block regulation of greenhouse gases, end ethanol subsidies, protect Social Security and alter last year's healthcare overhaul.
Furthermore, Reid's deputy, Senator Dick Durbin, fiercely opposes Tester's amendment.
Durbin is the author of the fee crackdown.
Bank of America Corp, the largest U.S. bank, has said the cap could cost it as much as $2.3 billion in fee revenues annually.
At the Fed's proposed level, the cap would cost the bank industry about $13 billion in annual revenue, CardHub.com has said.
"The credit card companies, Wall Street banks and their allies will no doubt continue to try to stop this reform from ever taking place, but I will do everything in my power to ensure that Main Street comes out ahead of Wall Street," Durbin said in response to an announcement by the Fed on Tuesday that it would miss an April 21 deadline to issue a final rule on the fee crackdown.
Federal Reserve Chairman Ben Bernanke said bank regulators needed more time to sift through more than 11,000 comment letters it received on the proposed fee cap.
He said he is committed to having a final rule in place by July 21.
Tester's move to try to attach the swipe fee delay to the small business bill currently being debated by the Senate prompted an angry response from a coalition of merchants.
"This amendment is quite simply a gift to Wall Street at the expense of Main Street." said Todd McCracken, president of National Small Business Association, an advocacy group.
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