Durbin Attacks TCF Court Challenge of Interchange Provision

WASHINGTON — Sen. Dick Durbin, D-Ill., blasted a court challenge to be filed Tuesday by TCF National Bank to a provision of the regulatory reform bill that would allow the Federal Reserve Board to regulate interchange fees on debit cards, arguing it is baseless.

In a press release, Durbin, who authored the provision, rejected claims the measure is unconstitutional because it will prevent the bank from making a reasonable amount of return and discriminates against larger institutions.

"TCF’s complaint not only fundamentally misunderstands the law regarding interchange fees, but it also ignores the facts," Durbin said. "The law in no way addresses the fees TCF, or any other bank, can charge and it does not set interchange rates. Our language simply ensures that debit interchange fees charged to retailers by the card networks — not the banks — are ‘reasonable and proportional’ to the cost of processing transactions and provides competition in an area of the market where there’s none."

The provision requires the Fed to write rules ensuring that interchange rates on debit cards, but not credit cards, are "reasonable and proportional." In his release, Durbin noted that the provision passed Congress by a wide margin, and accused the Minnesota-based bank of supporting anti-competitive practices. 

"Congress approved this language by a wide bipartisan margin in reaction to the frustrations of millions of merchants and consumers who were getting nickled and dimed by the anticompetitive interchange system set up by big banks and credit card companies — including TCF," Durbin said. "I look forward to this provision’s day in court and am confident that our language will be found to be fair and Constitutional."