It would delay the Fed's regulation of the fees by two years, giving banks and credit [image-nocss] unions the breathing room they have been urgently calling for.
Meanwhile, Representative Shelley Moore Capito (R-W.Va.), who leads a House Financial Services subcommittee, could introduce bipartisan legislation in the House, FBR Capital Markets financial policy analyst Edward Mills told the news agency.
Still, Mills and other analysts say it is unlikely Congress will pass legislation delaying the interchange rule the Fed proposed in December. Delay would likely require 60 Senate votes, which would be difficult to achieve given that just last summer, more than 60 senators backed an amendment advanced by Senator Richard Durbin (D-Ill.) that mandated that the Fed regulate interchange fees.
Under the provision, the Fed must issue final interchange fee standards by April 21.
"We do not think the political situation has changed, and we continue to think that it is unlikely that Congress will pass legislation to delay the implementation of the Durbin amendment," said Keefe, Bruyette and Woods analyst Brian Gardner on Tuesday in a research note cited by Dow Jones.
Still, the battle over swipe fees continues to heat up, said the report, fueling a lobbying war between the retail industry and the banking industry. Retailers for years have argued that interchange fees are excessive and scored a significant victory when the Dodd-Frank financial overhaul act required the Fed to rein in the charges.
The Montana Retail Association and the Montana Convenience Store Association have launched radio ads critical of Tester's decision to introduce an interchange bill.
"We are deeply disappointed in Senator Tester's decision to put the interest of big banks ahead of those of Montana's small businesses," said Brad Griffin, president of the Montana Retail Association in a statement. "The legislation, which has the support of Visa, MasterCard and the biggest banks in America, is part of the banking industry's campaign to keep their risk-free cash cow alive."
Ronna Alexander, president of the Montana Convenience Store Association, added, "Small businesses, including convenience stores, across Montana have suffered at the hands of the big banks and credit-card companies for too long. Senator Tester's plan to delay these reforms is an affront to every hard-working small-business owner in Montana."
Click hereto view the full statement and to listen to the radio ad.
At the same time, banks have blasted the Fed's interchange plan through print and TV ads. They say the Fed's plan to cap interchange fees at 12 cents per debit transaction amounts to government price-fixing and would hurt small financial firms and require banks of all sizes to charge consumers new fees to make up for lost fee revenues, Dow Jones said.
Currently, fees average about 44 cents per transaction. The cut in fee revenue could transform the debit-card industry by eating into billions of dollars in revenue at companies such as Visa Inc. and Bank of America Corp. Already, various banks have announced plans to charge consumers for checking accounts or limit debit-card services.
On a press call last week, Durbin said banks "have a lot of political clout in this town" and there's no way to block lawmakers from introducing legislation that would block regulation of interchange fees, but he vowed to fight back. "I'm going to continue to defend it," he said of his amendment.
(Click here for previous CSP Daily News coverage of interchange fee reform.)
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