WASHINGTON (Reuters) - U.S. Representative Barney Frank, co-author of last year’s Dodd-Frank bank regulation crackdown, said on Wednesday he supports delaying a part of the reforms that caps fees on debit card transactions.
“This was never in the House bill, and I didn’t think it was part of financial reform,” Frank, a Democrat, told Reuters. “It was a separate issue.”
Frank’s support for the delay could influence a pivotal vote on the measure set for later on Wednesday in the Senate.
In an issue of keen concern to major banks such as Citigroup, JPMorgan Chase and Bank of America, Democratic Senator Jon Tester has offered a measure that would delay the debit card fee cap.
“If the Senate passes Tester’s amendment, I think the House will accept it,” Frank said.
Banks, card networks and retailers are fighting over the cap, one of the most contentious aspects of the sprawling Dodd-Frank legislation approved in 2010 after the financial crisis of 2007-2009 that led to huge bailouts of big banks.
Banks and card networks oppose the cap, while retailers support it. Lawmakers have lined up on both sides.
“We think Senator Tester will prevail but the vote will be very close,” said Brian Gardner, a policy analyst at financial group Keefe Bruyette & Woods.
As written last year, the cap required the Federal Reserve to limit the fees that banks can charge to merchants when a customer uses a debit card.
Carrying out Congress’ orders, the Fed in December proposed capping the fees at 12 cents per transaction. That would be a 75 percent cut from the current level. Banks have said a cut like that could cost them $12 billion a year.
After the Fed issued its proposal, the banking industry turned to Congress in search of a delay or a rollback.
On Tuesday, a bipartisan group of lawmakers including Tester called for regulators to study the cap for six months. If problems were found, it could be scrapped. The Fed would then have six months to draft a new proposal.
“I’ve been told some of the Republicans don’t like it because they don’t think it goes far enough,” Frank said regarding the Tester proposal, but he said he backs it.
Critics have said that delaying the cap would be a gift from Congress to banks and card network groups such as Visa Inc and MasterCard Inc.
Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn