The Senate will vote at 2 p.m. Wednesday to settle a year-long battle between banks and a coalition of retailers over the fees charged on debit-card transactions.
The Senate will consider an amendment sponsored by Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) to delay new regulation by the Federal Reserve that would cap the fees at 12 cents per transaction.
Banks currently charge an average of 44 cents per transaction, reaping $1.3 billion a month in revenues.
Retailers led by the National Retail Federation and the Retail Industry Leaders Association have pushed back with their own grassroots and lobbying offensive.
Debit-card fees is one of the few major issues in the 112th Congress that breaks deeply across party lines.
Senate Majority Leader Harry Reid (D-Nev.) and Senate Democratic Whip Dick Durbin (D-Ill.) oppose the Tester-Corker amendment, which would delay by 12 months the Fed’s rulemaking process.
Durbin set the regulations into motion last year by successfully attaching an amendment to the 2010 Wall Street reform law that directed the Fed to review debit-card fees to ensure they are reasonable and proportional.
Senate Democratic Policy Committee Chairman Charles Schumer (D-N.Y.), who represents Wall Street and the New York financial sector, said he supports a delay and further study of the Fed’s rules.
Sen. Debbie Stabenow (D-Mich.), vice chairwoman of the Democratic Policy Committee, has informed the Michigan Credit Union League & Affiliates that she will also support the rule.
The issue has split the Senate Republican Conference, as well.
Sen. Mike Enzi (Wyo.), the ranking Republican on the Health, Education, Labor and Pensions Committee, said Wednesday he would vote against Tester and Corker because high fees hurt small business.
“The profit margin of business is too narrow to sustain these increases. This is why defeating the Tester-Corker amendment means saving jobs in my home state of Wyoming and around the nation,” Enzi said.
Durbin expressed confidence Tuesday he would win the vote, but acknowledged the count would be very close.
Some Senate proponents of the Tester bill acknowledge they’re probably short the 60 votes necessary to pass it, but are still holding out hope — many senators have refused to say publicly where they’ll come down.
Tester and Corker scrambled Tuesday to pick up additional votes by changing their proposal to reduce the delay of the rule-making process to 12 months from as long as two years in the previous version.
The lawmakers also stressed they would direct the Fed to take into account fixed as well as incremental costs when setting limits on banking fees.
Tester argued Wednesday that his amendment is necessary to protect small community banks that will be shocked by a sharp decrease in revenues.
“Now, the big Wall Street banks can handle that. They aren’t happy about it, but they can live with it. They have plenty of tools that will help them to make up the difference,” Tester said in prepared floor remarks.
“But the Main Street banks and the credit unions — the small guys who had nothing to do with the financial crisis — can’t survive on a 75 percent cut in that revenue. These are the banks in Montana. These are the folks I want to make sure have a fair shake,”
Durbin rejected the notion that Tester and Corker had offered a compromise by reducing the proposed delay and making other changes.
“It is not a compromise,” he told reporters. “The amendment suspends the Fed’s new rule for at least 12 months but there’s not an effective date on it, so it could go much longer, which means that the banks will continue to collect $1.3 billion a month in debit card fees from merchants and retailers.
“It basically means that we lose.”