Senate Democratic Whip Dick Durbin (Ill.) won one of the biggest victories of his career Wednesday by leading the defeat of a controversial banking proposal supported by Sen. Charles Schumer (D-N.Y.) and the powerful banking industry.
An amendment sponsored by Sen. Jon Tester (D-Mont.) that would have delayed regulations on debit-card fees fell six votes short of the 60 it needed to win passage, 54-45.
At stake was $1.3 billion banks collect every month from debit-card fees that average 44 cents per transaction. The Fed is expected to cap fees at 12 cents per transaction when it unveils its rule by July 21.
Durbin’s victory is a resounding affirmation of one of his biggest personal wins of the 111th Congress — the 2010 law directing the Federal Reserve to ensure that banking fees on debit-card transactions are reasonable and proportional.
“Winning this last year and holding onto it with a change of Congress was quite a battle. I’ve had some tough fights in my career, but I’ve never had one that both sides were so invested in and there were such strong feelings,” Durbin said after the vote. “It was painful in that Jon Tester is a great friend and a person I love, and his wife Sharla, and I’m sorry to be on the other side, but I think at the end of our day our friendship is still strong.”
Durbin noted that the banking industry had defeated him on other bills, such as his effort to stop sub-prime mortgages several years ago as well on the so-called cramdown issue.
“I understood they were formidable challengers,” he said.
Tester’s amendment would have delayed the Federal Reserve from setting standard swipe fees.
Durbin garnered 64 votes in 2010 to require the Fed to review what many retailers consider excessive debit-card fees. But Durbin won that victory in the midst of the Wall Street reform debate, when banks’ reputations were still heavily tarnished from the 2008 financial collapse and subsequent government bailout.
Banks have had more than a year since that May vote to rehabilitate their image and devise a massive lobbying campaign. But since they were playing legislative offense, they had to garner 60 votes to blunt the impact of the Fed’s rulemaking.
Nine Democrats, including Schumer, chairman of the Democratic Policy Committee, who voted for Durbin’s amendment last year, supported Tester’s amendment Wednesday. The others were Sens. Mark Begich (Alaska), Michael Bennet (Colo.), Kirsten Gillibrand (N.Y.), Kay Hagan (N.C.), Barbara Mikulski (Md.), Ben Nelson (Neb.), Debbie Stabenow (Mich.) and Jim Webb (Va.).
Schumer helped four of them gain entry to the Senate as chairman of the Democratic Senatorial Campaign Committee in 2006 and 2008: Begich, Gillibrand, Hagan and Webb. Stabenow serves with Schumer as vice chairwoman of the Democratic Policy Committee.
A senior Democratic aide said Schumer did not whip Wednesday’s vote and let Tester take the lead in corralling Democratic votes for his amendment.
Nineteen Democrats joined 35 Republicans in voting for Tester’s proposal. Twelve Republicans voted with 32 Democrats and one Independent to block it.
Sen. Joe Lieberman (I-Conn.), who voted against Durbin’s amendment in 2010, missed the vote.
Durbin’s allies proclaimed it a major win for the second-ranking Democratic leader.
“I think Durbin’s won twice. When you win, you’re a winner,” said James Williams, a former aide to Durbin.
Williams stayed neutral in the fight. He worked for Durbin, but his K Street firm, SNR Denton, represents clients who supported Tester’s amendment.
A Democratic lobbyist who fought hard to pass Tester’s amendment said Wednesday’s votes dealt the banks a decisive defeat.
“I think this is it,” said the lobbyist, who warned that retailers might now be emboldened to try to cap credit card fees as well. “It could be hard to get traction on that, but don’t underestimate Durbin.”
The banking lobbyist conceded that “it’s certainly a good thing for him as a legislator” but questioned whether “it’s a major boost to his chances to become [Senate Democratic] leader” because many Democratic colleagues wanted to avoid the fight altogether.
Durbin told reporters that he tried to avoid the contentious floor fight but banks weren’t interested in compromise.
Tester and Corker scrambled on Tuesday to modify their proposal by reducing the delay of regulations to only one year.
Durbin immediately rejected it.
“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. That’s their idea of a compromise? It basically means we lose,” he told reporters.
Durbin said the floor battle couldn’t be avoided and knew it put members in a tough spot.
“A lot of my colleagues say, ‘Please don’t let this come to a vote’ and others … say, ‘Please make it go away.’ The only way that I can possibly do that is bring it to a vote and hope that I can prevail,” Durbin said before the vote.
Durbin acknowledged the vote was “painful” because “they go back home and they got credit unions and community banks coming after them and retailers and merchants, convenience stores, saloon keepers, restaurants. It is a very big grassroots issue.”
This story was originally posted at 2:45 p.m. and updated at 8:21 p.m.