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CUNA backs court delay of interchange fee cap
WASHINGTON (5/17/11)--The Credit Union National Association (CUNA), and its partners in the Electronic Payments Coalition, late last week filed a court document in support of TCF National Bank’s (TCF) lawsuit to block the Federal Reserve Board's implementation of proposed debit card interchange fee cap regulations. The CUNA amicus curiae--or “friend of the court”--brief was submitted in support of TCF’s recent appeal of a ruling by U.S. District Court for the District of South Dakota Judge Lawrence Piersol. Piersol declined to dismiss TCF's suit against the Fed--but also declined to issue an injunction based on the statute. The CUNA brief asks for a reversal of the judge's denial of a preliminary injunction. The TCF suit, filed last October, states that the government cannot write laws that would arbitrarily prevent a given business from recovering its costs sufficiently to avoid losses on its various business operations. TCF charges the interchange cap is just such a law. TCF also alleges that portions of the Dodd-Frank Wall Street Reform Act that would require the Federal Reserve to set restrictions on debit card interchange fees are unconstitutional, and argues that the Fed's implementation plan restricts a financial institution's ability to recover costs associated with providing the debit card service. CUNA’s amicus brief argues, in part, that credit unions and banks--under their legislative and regulatory mandates--serve “established, important public interests.” CUNA notes in its filing that the public interests at issue in this case is the “enablement and innovation of the electronic payments system,” an interest that the federal government both “supports and expects financial institutions to support.” The Fed’s proposed debit card interchange fee cap of seven cents to 12 cents, down from a current average charge of 44 cents, would not only eliminate any return on debit-card products and services, it would also cap the fees at an amount far below any card issuers per transaction cost. This reduction would not only sever the card industry’s ability to foster innovations, it would likely, as CUNA has noted often, force an introduction of new fees to all consumers who are debit card users. CUNA’s partners in filing the brief are the Clearing House Association LLC, American Bankers Association, Consumer Bankers Association, The Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, and the National Association of Federal Credit Unions. TCF filed its brief on May 2. The Fed’s next brief is due Thursday and TCF will have the option to file an additional reply brief by May 23.


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