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Fed Chairman Ben Bernanke said the central bank required more time to review the more than 11,000 comment letters it has received on its interchange proposal issued in December.
March 29 -
The banking industry saw the first tangible signs of progress Tuesday in its fight to overturn the Durbin amendment, as lawmakers officially introduced bills that would delay ...
March 15 -
In a rare show of unity, the leading bank and credit union industry groups filed a joint friend-of-the-court brief to support TCF's lawsuit looking to block implementation of the Durbin amendment.
March 11 -
Several bankers spoke directly with top Fed officials on Thursday, arguing that if they finalized their interchange rule, it would gut industry profits and hurt consumers.
March 10 -
Acting Comptroller of the Currency John Walsh warned Tuesday that a Federal Reserve Board proposal to limit debit interchange fees could hurt banks of all sizes.
March 8
WASHINGTON — Bankers, lawmakers and other opponents of a rule to limit interchange fees on debit cards are making the most of the opportunity after the Federal Reserve Board acknowledged last week that it could not comply with an April 21 statutory deadline to finalize the regulation.
A top JPMorgan Chase & Co. official said Tuesday the bank would not move forward with plans to change its debit card program if Congress acted to delay the regulation.
His comments came as Rep. Barney Frank, the top Democrat on the House Financial Services Committee, said he was willing to support a bill that would push back the implementation date.
In an interview, Ryan McInerney, the chief executive officer of consumer finance for JPMorgan Chase, said the bank is willing to hold off on planned cutbacks to its debit rewards program if Congress acts.
"We don't want to make the changes," said McInerney. "But we have to make the changes as a result of the economic impact of the law. If the regulations are delayed, we wouldn't make the changes."
His comments came the same day that Jamie Dimon, the bank's chairman and CEO, criticized the Durbin amendment.
"There are 400 rules being made now," Dimon said at a Council of Institutional Investors conference in Washington. "There are things in there that are idiotic … the Durbin amendment was passed in the middle of the night with no facts, no analysis and Congress had to vote on it, and it had nothing to do with the crisis."
The industry has mounted an aggressive campaign to delay or scrap the interchange limit, which was added by an amendment from Sen. Richard Durbin, D-Ill., to the regulatory reform law enacted last year.
Their efforts received a major boost on Tuesday when Frank said he would support a delay.
"The Federal Reserve's announcement that they cannot meet the deadline on interchange fees confirms my view that this is the only part of the financial reform bill that needs to be amended," Frank said in a press release. "For this reason, I support legislative action to postpone the deadline so that we can revisit it."
The Federal Reserve in December proposed limiting debit interchange fees to 12 cents a transaction. Since then, several banks, including JPMorgan Chase, Wells Fargo & Co. and Regions Financial Corp., have announced changes that they would be forced to make as a result of the Durbin amendment.
JPMorgan Chase has already taken some actions, including saying it would no longer waive monthly checking account service fees for customers who actively use their debit cards and eliminating its rewards program for new debit card customers.
It also began sending letters to existing debit card customers saying it would eliminate its reward program as of July 19 — two days before the cap is to take effect. The bank specifically blamed the Durbin amendment for the change.
"Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards," the bank said to its customers. "As a result of this law, we will be changing our debit rewards program."
McInerney said the bank received feedback from customers protesting the changes. The bank has 8 million rewards customers. According to a report from Moody's Investors Service released March 28, cutting debit rewards would result in a savings of less than $200 million a year for JPMorgan Chase. The bank has said it expects to lose $1.3 billion a year from debit regulation.
"We have received feedback on both of those issues," he said. "Customers, of course, prefer to not pay a monthly fee on a checking account and value the ability to get that fee waived if they use their debit account. Customers also value the debit rewards program and were concerned the program was being eliminated."
But he said the bank wants to be able to keep these programs for customers. "If the Durbin amendment is delayed by Congress, there are two things we would do," McInerney said. "We will waive monthly checking account service fees for customers who actively use their debit cards. That's something we did previously and stopped in February in anticipation of the Durbin amendment going into effect. The second thing we will do is keep our debit rewards program in place. We had told customers we would be ending that program soon. If Congress delays the amendment for further study, we would absolutely keep this benefit in place."
While some have argued that JPMorgan and other banks are just trying to scare customers in order to force Congress to take action, McInerney said the bank has to make cuts as a result of the Durbin amendment. "As it is currently written, the Durbin amendment prevents banks from recovering the full cost for the debit product. We do not want to raise prices or eliminate benefits for our customers, but we can't offer products where we lose money on every transaction," he said. "It is not a sustainable business model."
The sole factor in cutting those benefits was the new law, McInerney said. "We had to make these changes as a result of the economic impact of the law," he said. "We absolutely want our customers to have these programs and to waive these fees. If Congress delays the amendment, we want our customers to have these benefits."
Lawmakers have offered two measures to delay the rule. Sen. Jon Tester, D-Mont., has proposed a bill that would delay the Durbin amendment for two years and require a study of the costs of creating a debit system.
Rep. Shelley Moore Capito, R-W.Va., has introduced a bill that would delay the interchange rules for one year and force the Fed to make changes if two of the four financial institution regulators — the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National Credit Union Administration — argue the central bank needs to include other costs in the proposal.
Tester filed his bill as an amendment to a small-business bill but it is still unclear if it has enough support to be added to that legislation. Still, momentum for a delay has continued to build. Fed Chairman Ben Bernanke acknowledged last week that the central bank could not finalize the rule by the April 21 deadline set by Dodd-Frank as a result of all the comments it has received. He said the Fed would still ensure a final rule is in place before the rule goes into effect on July 21, however.
On late Monday, a judge denied the government's motion to dismiss TCF Financial Corp.'s lawsuit over the Durbin amendment.
The American Bankers Association took the court ruling as a sign Congress should act.
"The Court's decision on Monday to deny a preliminary injunction did not find that the Durbin amendment is good public policy," ABA President Frank Keating said in a press release. "All the more reason for the Congress to quickly act to suspend these rules before consumers, communities and the local banks that serve them are gravely harmed."
Last week, 33 conservative groups sent a letter to Congress urging a delay and study of the amendment.
"Consumers and seniors on fixed incomes will likely bear the brunt of these regulations directly, as card issuers struggle to cover the cost of artificially low price controls on interchange fees," the groups wrote. "For card holders, this means higher fees, fewer card rewards, the elimination of banking services such as 'free checking,' or otherwise. Simultaneously, banks — and particularly smaller card issuers — will be forced to determine whether offering some consumer services is more costly than it is worthwhile."
