| WASHINGTON, March 10
WASHINGTON, March 10 Richard Durbin, the No. 2
Democrat in the U.S. Senate, on Thursday lashed out at debit
card networks and big banks that he said are working to delay
and gut rules he wrote to slash debit card fees.
"It's one of the most active lobbying efforts I've ever
seen," said Durbin, of Illinois, on the Senate floor.
"Visa (V.N) and MasterCard (MA.N) don't dare raise their
heads on Capitol Hill" because they are so politically
unpopular, which prevents them lobbying directly, he said.
Similarly, he said, major Wall Street banks that issue
debit cards suffer from the same problem. "So what do they do?
They have beards ... Their agents are the credit unions and
community banks," Durbin said.
Banks and retailers are waging a pitched battle over
"interchange" fees, which merchants pay banks every time a
customer buys something with a debit card.
Crackdown opponents have been heartened by recent calls
from lawmakers in both parties for a delay of the rule, as well
as comments by regulators that it may harm small banks.
Durbin has pushed back hard against all of these
complaints, quickly scolding regulators for their comments and
calling a delay a smokescreen for a repeal.
The fee crackdown is mandated under 2010's Dodd-Frank
banking reforms, enacted after the 2007-2009 banking crisis.
Dodd-Frank directed the Federal Reserve to set a "reasonable
and proportional" fee that can be charged.
The regulator of large U.S. banks on Tuesday said a Fed
proposal to crack down on the fees goes too far and could hurt
banks. John Walsh, acting head of the U.S. Office of the
Comptroller of the Currency, wrote to the Fed on March 4,
expressing his concerns over the rule.
Fed Chairman Ben Bernanke and Federal Deposit Insurance
Corp. Chairman Sheila Bair have argued that the Fed proposal
could hurt small banking institutions. In December, the Fed
proposed capping fees at 12 cents per debit transaction -- a 75
percent cut from 2009's average of 44 cents.
A cap at this level would cost banks about $13 billion in
annual revenue, according to CardHub.com.
In a Feb. 22 letter to the Fed, Bank of America (BAC.N)
said it would get $1.8 billion to $2.3 billion less in fees
annually under the crackdown.
Retailers argue banks are charging more than needed to beef
up profits. Community banks and credit unions have been
aggressively pushing to have the rule delayed or changed.
The law exempts institutions with less than $10 billion in
assets from the crackdown, but these banks argue the Fed rule
will set the de facto rate that merchants will charge, an
argument rejected by supporters of the crackdown.
Allowing a delay would represent "another bailout" of Wall
Street and the banks, Durbin said. "There comes a point when we
need to act ... There's no need to delay."
(Editing by Gary Hill)