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The fight over the interchange amendment heated up on Wednesday when Sen. Dick Durbin sent JPMorgan Chase CEO Jamie Dimon an open letter defending the provision.
April 13 -
Opponents of a rule to limit debit card interchange are making the most of an opportunity after the Fed acknowledged it would not make an April 21 deadline to finalize the regulation.
April 5 -
Speaking at the U.S. Chamber of Commerce conference, leaders in the government and banking industry decried the Dodd-Frank Act one by one, calling it backward and misguided.
March 30 -
U.S. Bancorp no longer plans to bide its time as competitors figure out how to recoup fee income regulated away by the Durbin amendment. Now it will be piling on with everyone else.
January 19
U.S. Bancorp Chairman and Chief Executive Richard Davis said it's a toss-up as to whether the Federal Reserve presses ahead with a 12-cent proposed cap on debit interchange transactions.
In the meanwhile, he has no intention of making customers feel as though they, or their debit relationships, are being held hostage.
"It's still a 50-50 call on whether or not we're going to wind up having the kind of severe loss of income that's currently proposed," Davis said Tuesday on U.S. Bancorp's quarterly conference call with analysts.
Asked what he makes of fellow industry leader Jamie Dimon's aggressive criticisms of the Durbin amendment — in his recent letter to shareholders, the JPMorgan Chase & Co. chairman and chief executive described the measure as "price fixing at its worst" and warned that the "harm will fall largely on consumers" — Davis said U.S. Bank does "worry about the unintended consequences, but we're not going to play threat, we're not going to put our customers in the middle of a dogfight."
Davis, who recently finished his term as chairman of the Financial Services Roundtable, said U.S. Bancorp will stand pat until the Fed's July 21 deadline to finalize some of its rulemaking around interchange. The Minneapolis company will evaluate its options for recouping revenue if the Fed caps interchange fees below what it costs to provide debit-related services, he said.
"Unless and until that happens, we're going to wait and see," Davis said. "We have not decided how we would recover those losses at this point."
A 12-cent cap would represent no more than "20% to 25% of what the real number is under anybody's measure" of what it costs banks to cover debit transactions, and would put U.S. Bancorp on a "delicate walk between taking care of our shareholders and taking care of our customers," Davis said. If the cap goes through as proposed and the bank responds by implementing a new service charge for debit customers, "I won't make it a threat," Davis said, "but I won't make it a secret."
Dimon's criticisms of the Durbin amendment have sparked a war of words with its author, Sen. Dick Durbin, D-Ill., who defended amendment in an April 12 letter to Dimon suggesting that while the measure and the Fed's proposed rules were "not written the way you wanted," it "does not mean they were written poorly or that the process that created them was flawed."
Davis, in contrast, went out of his way Tuesday to note that the senator's "intention was good, and his intention was to make sure that customers are not harmed."
"Had the Fed in their first pass provided an answer that was close to the cost of doing business," Davis said, "… there wouldn't have been a discussion here."
