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The head of TCF Financial Corp., which sued the Federal Reserve Board in October to challenge its debit card interchange fee caps, said growing opposition to the proposal may help his case.
January 20 -
William Cooper, TCF's chairman and chief executive, said Tuesday that its lawsuit against the Federal Reserve Board to block caps on debit card interchange fees is about more than preserving revenue, and that the industry could face worse restrictions if it stands idle.
October 12
The Federal Reserve Board and Office of the Comptroller of the Currency are asking a federal judge to dismiss TCF Financial Corp.'s lawsuit, which seeks to block implementation of the Durbin amendment.
In a motion filed Friday in U.S. District Court for South Dakota, the defendants moved for the suit to be dismissed for failure to "state a claim upon which relief can be granted" and lack of subject matter jurisdiction.
TCF
The Wayzata, Minn., banking company argued that the amendment imposed "unconstitutional limitations on the ability of TCF and similarly situated banks to recover their costs for providing" debit card services to customers.
In December, the Fed proposed limiting the fees, which merchants pay to banks when consumers use debit cards, to 12 cents per transaction compared with a current average of 44 cents. The Fed is collecting comments on the proposal until Feb. 22 and is required to issue final rules by April 21. The rules take effect July 21.
In an amended complaint filed in January, TCF said it expects its annual interchange revenue to drop from $102 million to $20 million after the Fed's rules take effect.
In their memorandum supporting a motion to dismiss, the Fed and OCC said that TCF failed to identify any statute, regulation or contract that guarantees it should receive the current level of debit interchange it receives.
They also said under U.S. banking code, TCF is barred from seeking injunctive relief to block an enforcement action by a banking agency — in this case the OCC.
Regardless, a preliminary judgment should not be granted "because the harm that Plaintiff alleges regarding a potential reduction of interchange income, loss of customers, and decline of stock price is not impending and is highly speculative," the document said.
At hearings in Washington on Thursday, regulators and legislators expressed concerns over the proposals, suggesting that the implementation timeline be delayed.
