WASHINGTON (UPDATED: 8/28/13, 3:20 P.M. ET)--The Credit Union National Association and a broad coalition of financial industry representatives just filed a supplemental briefing in the ongoing debit interchange fee court case.
The brief addresses three major points, including arguments against requiring or allowing the Federal Reserve Board to draft an new version of the Dodd-Frank-imposed fee cap regulations to be implemented on an interim basis, either as the Fed's appeal proceeds or after.
Merchant plaintiffs filed a brief in the case earlier today, and the Fed has also filed its brief. Watch News Now
for more on the Fed brief.
In the brief, CUNA and coalition partners argue:
There is no legal basis for the court to order an independent agency to draft an interim rule. Under Supreme Court and D.C. Circuit precedent, only the Fed can determine whether and when to issue any such rule;
In any event, the court should not require an interim rule. A rush to issue a new, temporary rule will harm all affected interests, including consumers, and threaten the effective functioning, stability, and security of the electronic debit-card payments system; and
An order requiring the Fed to issue an interim rule will almost certainly result in more litigation, further muddying the regulatory landscape in an area where parties need certainty.
For these reasons, the financial institution coalition has asked the court to keep the current Fed regulation in place pending the Fed's appeal. The American Bankers Association, Consumer Bankers Association, Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, National Association of Federal Credit Unions and National Bankers Association joined CUNA in filing the brief.
The briefs were requested by U.S. District Court for the District of Columbia Judge Richard Leon. Leon late last month struck down the Fed's rules on debit interchange fees and routing procedures under the Durbin Amendment. He ruled at that time that the Fed did not follow narrow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin amendment. The interchange regulation, however, is still intact due to a stay on the judge's order.
The Fed has appealed this decision.
In their brief, the merchants asked the court to keep the current Fed rule in place during the appeal, believing this is "critical to prevent substantial harm" that they believe could occur to the merchants if the protections of the Durbin Amendment's interchange regulation are left entirely unimplemented during the appeal process.
Merchants did, however, support forcing the Fed to issue an interim final rule.