WASHINGTON, March 10 (Reuters) - 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.
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)