Earlier this week, the conference committee working on the financial services overhaul met again to tinker with provisions that were causing some Senators to declare "no" votes, added a NACS report. They approved [image-nocss] a revised conference report that strips two key provisions that would have affected final passage: a provision that would end the $700 billion Troubled Asset Relief Program (TARP), and a provision that would "boost the minimum premiums that large banks have to pay into the FDIC's insurance fund to be able to comply with pay/go budget rules," said NACS, citing Congress Daily.
Even with the "bank tax" gone, several Senators are still opposed or have not made up their mind, NACS said. Senator Russ Feingold (D-Wis.) is a definite no vote, but Senator Susan Collins (R-Maine) is a yes. There are four others who have not officially declared their position Senators Scott Brown (R-Mass.), Charles Grassley (R-Iowa), Olympia Snowe (R-Maine), and Maria Cantwell (D-Wash.). That leaves Senate leadership with 56 assured yes votes but they will need 60 to send the bill to the president. Senate leadership believe they may have the votes necessary to avoid a filibuster by courting GOP moderates.
The Senate was expected to take up the bill following House passage; however, memorial services for Senator Robert Byrd (D-W.Va.) required postponing the vote until after the July 4 recess.
After passing both the Senate and House, a conference committee is created to work out differences between the Senate and House versions of the bill. A conference report resolving those differences passed in the House of Representatives, paving the way for enactment of the bill by roll call vote. President Obama has said that he intends to sign the legislation.
PMAA has led efforts, including those of a multi-hundred entity coalition to pass derivatives reform legislation and success in those efforts is as close as a final Senate vote. PMAA joined those coalition members in a letter to Congressmen and Senators urging support for H.R. 4173.
Debit-card interchange fees will finally be reined in with the passage of this important legislation, PMAA added.
H.R. 4173 grants the Federal Reserve the authority to determine if the interchange rate is reasonable and proportional to the cost incurred by the issuer. The Fed may permit an adjustment to the interchange rate for issuers to recover fraud prevention costs if the issuer is in compliance with rules established by the Fed and can demonstrate that the incremental increase would go toward fraud prevention costs only. The language also permits retailers to offer a discount for cash, check or debit but not for using American Express or Discover over Visa or MasterCard. Retailers may also set purchase minimums but the minimum may not exceed ten dollars.
Provisions important to motor fuels and heating oil marketers in the futures market/derivatives title include aggregate position limits on speculative oil traders, mandated clearing of OTC commodity derivatives, exemption of end-users like PMAA member companies from clearing and margin requirements if they are doing so for commercial purposes, and Commodity Futures Trading Commission (CFTC) authority to regulate swaps, OTC, energy-related, and electronically-traded transactions by closing the "Enron Swaps" and "London" or "Foreign Exchange" loopholes. Financial institutions would have to separate their commodity derivatives trades into a separately capitalized entity walled off from federally insured deposits. This will essentially reduce the amount of leverage speculators take in trading West Texas Intermediate (WTI) crude oil, RBOB and heating oil contracts.
The National Retail Federation (NRF) welcomed a provision in financial services reform legislation passed by the House today that will help hold down the $20 billion in debit-card swipe fees charged annually by the banking industry and allow merchants to give discounts to customers who don't use credit cards.
"The House has sent a clear message that big banks shouldn't be allowed to drive up consumer prices by charging fees that are outrageously out of proportion to the actual cost of processing a transaction," NRF senior vice president and general counsel Mallory Duncan said. "The requirements of this bill should result in debit card swipe fees that are truly 'reasonable' and ensure that banks can't put their hands quite as far into consumers' wallets as they do today."
He added, "Retailers want to give their customers full value for every dollar spent and not be forced to raise prices in order to collect unfair fees on behalf of the credit- and debit-card industry. This legislation will reduce debit card swipe fees and, in turn, help retailers hold down prices for their customers. It will also make it easier for retailers to give a discount to customers who choose to save money in return for not using a credit card. That will give families trying to stretch their dollars in the current economy additional control that they don't have now and is a major win for consumers across the board."
The Food Marketing Institute (FMI) praised the House action. "This vote is incredibly important to both merchants and consumers and is the beginning of a process that will provide greater transparency in credit and debit transactions. It will give merchants the ability to more efficiently plan their operational costs for the benefit of their customers," said Leslie G. Sarasin, president and CEO of FMI. "We applaud the House for approving this bill to bring reasonable regulation to interchange swipe fees set by the banks and credit-card companies."
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