New, shorter delay to interchange limits introduced

Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) unveiled a reworked version of their effort to curb new limits on debit card fees Tuesday, as they work to garner the 60 votes needed to approve the amendment.

The new amendment would halve how long the new limits would be delayed, to 12 months from the original two-year delay proposed by Tester. It also would call for regulators to conduct a six-month study of all the costs associated with debit transactions, the impact of the rules on consumers, and whether small financial institutions can be properly exempted from the limits as envisioned by the Dodd-Frank financial reform law.

A vote on the amendment could come sometime this week.

The latest attempt at an amendment marks the latest round in one of the most bruising lobbying battles on Capitol Hill over the so-called Durbin amendment. With billions in potential revenue at stake, retailers and banks have been engaged in a months-long battle over the provision, backed primarily by Sen. Dick Durbin (D-Ill.).

It also comes as the July 21 deadline for the limits to take effect draws close.

Under the new amendment, if the Federal Reserve -- which is required to write rules implementing the new limits -- and another financial regulator determine the provision fail to account for all costs, adversely affect debit card users, or cannot exempt small banks, then the Fed would be required to rewrite the rules over a six month period.

If regulators do not come to those conclusions, the Fed is free to move forward with its currently proposed rules -- which would slash the fees banks can charge retailers for using debit cards from the current industry average of 44 cents to seven to 12 cents per transaction.

In addition, the amendment would require regulators to revist the small bank exemption two years later to make sure it is still working properly, and report those findings to Congress.

Retailers immediately launched into strong opposition to the amendment as it was being rolled out on the Senate floor, calling it a handout to banks.

"While proponents try to cast this amendment as a 'compromise,' it is just the opposite," said Sandy Kennedy, president of the Retail Industry Leaders Association. "The Tester/Corker Amendment is a remarkable giveaway to big banks and credit card companies at the expense of merchants and consumers, pure and simple. "

Signing on to the Tester-Corker amendment were Sens. Kay Hagan (D-N.C.), Tom Carper (D-Del.), Mike Crapo (R-Idaho), Roy Blunt (R-Mo.) Jon Kyl (R-Ariz.), Chris Coons (D-Del.) and Michael Bennet (D-Colo.). Bennet, Crapo and Hagan all originally voted for the Durbin amendment.

Bernie Becker contributed to this report.

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