By Alexander Bolton - 04/08/11 10:03 AM EDT
Sen. Charles Schumer is expected to support legislation backed by the banking industry that would put him into conflict with Sen. Dick Durbin, a rival to succeed Senate Majority Leader Harry Reid (D-Nev.).
K Street sources say Schumer (D-N.Y.) will support legislation sponsored by Sen. Jon Tester (D-Mont.) that would delay regulations curbing the fees that banks may charge on debit cards. Tester’s bill has strong backing from banking interests in New York.
The legislation requires the Federal Reserve to limit the fees banks can charge retailers for processing debit card transactions, and a massive lobbying fight has broken out this year over Tester’s legislation to revise it.
Congress called on the Fed to ensure that these so-called interchange swipe fees are “reasonable,” and regulators have mulled capping the fee at 12 cents per transaction, about a quarter of its current average.
Two prominent lobbyists working for the banking industry told The Hill this week that Schumer would support the Tester amendment, though he might keep his activity largely behind the scenes.
A Democratic aide who’s working to win approval for Tester’s amendment said that K Street sources have said Schumer’s staff indicated it would help.
But the aide said it would be sensitive for Schumer to take a public stance because Durbin has been so “passionate” on the issue.
Schumer referred a question about his support for delaying new regulations to his spokesman, who did not respond to several requests for comment.
But on Wednesday, Schumer said there had not been sufficient study of swipe fees prior to passage of the Wall Street reform law.
“On this particular issue, because there wasn’t study, there is some momentum, led by Sen. Tester, who has done a great job, to at least delay it and see how it’s affected,” Schumer said at a Wednesday breakfast.
Schumer predicted the Senate would vote on Tester’s bill this year.
Schumer and Durbin, who have long shared a Capitol Hill townhouse with Rep. George Miller (D-Calif.), have been seen as rivals to replace Reid for years. Speculation over their rivalry reached a fever pitch last year when it appeared Reid might lose reelection, but died down substantially after Reid won another six-year term.
Durbin took the lead in championing the banking reform, which was one of his most prominent legislative accomplishments of the 111th Congress, and he has admitted the issue is personal for him.
“Perhaps I have a little prejudice involved too,” Durbin said in a March 31 floor speech.
“The biggest banks in America — the top 1 percent of banks in America — are the ones that do almost 60 percent of this card business. I am talking about the same Wall Street banks that ended up getting a bailout from the federal government, to the tune of hundreds of billions of dollars.
“I do not have a lot of sympathy for them,” he said. “From my point of view, we should not be subsidizing them or creating an opportunity for them to fix prices when it comes to merchants and retailers across America.”
Schumer has taken over a large and growing part of the Senate Democratic leadership portfolio since the midterm elections.
At the end of last year, Senate Majority Leader Harry Reid (D-Nev.) tasked Schumer with taking control of the Senate Democratic policy and messaging shops. As chairman of the revamped Senate Democratic Policy Committee, Schumer is in charge of coordinating floor operations with the broader communications and political strategy.
Schumer has played a central role in bicameral talks over a spending agreement to avert a government shutdown.
Tester has filed his bill as an amendment to small-business legislation on the Senate floor.
Tester’s bill would delay the implementation of new regulations for debit cards by a year to 18 months.
Some Democratic aides doubt he’ll be able to garner enough votes to modify the Durbin amendment, which won 64 votes on the Senate floor last year. Schumer was one of 46 Democrats to vote for it.
But Tester’s predicting victory if his amendment gets a vote.
“What he’s been saying is that he’s confident that he’ll have the votes when it comes to the floor,” said Andrea Helling, Tester’s spokeswoman.
Rep. Barney Frank (Mass.), the ranking Democrat on the House Financial Services Committee, said earlier this week he would support revising the law affecting swipe fees.
Banking lobbyists note that New York City is the biggest domestic hub of the banking industry and argue Schumer should look after their interests.
They say the political climate now is much different from a year ago, when Durbin passed his amendment. Lobbyists argue it was relatively easy for Durbin to muster support for his amendment when public opinion of the banking sector was still at an ebb in the wake of the 2008 financial collapse.
Banking industry advocates are waging a heavily financed public relations campaign to build support for the Tester amendment and believe the political climate has become more favorable to their cause.