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Washington
Congressmen urge closer look at interchange impact
WASHINGTON (4/8/11)--A quartet of Democratic and Republican congressmen have urged their House colleagues to “take a close look” at merchants' interchange fee cap claims and to determine “whether allowing the Federal Reserve to set interchange rates would be good for consumers.” The letter, which was co-signed by Reps. Gary Peters (D-Mich.), James Renacci (R-Ohio), Ed Perlmutter (D-Colo.) and Steven LaTourette (R-Ohio), encouraged members of Congress to co-sponsor H.R. 1081, which would delay the effective date of the Fed’s interchange fee cap provisions by one year. That bill would also require a study of an interchange fee cap’s impact on consumers, financial institutions, and merchants. The Fed’s interchange proposal, set to go into effect in late July, could lower the amount of transaction fees charged to seven cents per transaction. In the letter, the legislators note that financial institutions would likely need to increase fees, end free checking, or eliminate some member or consumer benefits to make up for the funds lost due to reduced interchange fees. “There is no evidence that merchants would pass their savings from reduced interchange rates on to consumers through lower prices,” the letter adds. In closing, the legislators noted that the increased costs and decreased access to the banking system make the interchange legislation “bad for consumers.” The House interchange delay legislation was introduced by Rep. Shelly Moore Capito (R-W.Va.) and currently has 71 co-sponsors. Sen. Jon Tester (D-Mont.), who, along with Sen. Bob Corker (R-Tenn.), introduced interchange delay legislation in the Senate, has reportedly said that he has gathered the 60 votes needed for Senate passage of that bill. For the letter, use the resource link.


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