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Washington
Renacci to Durbin Interchange fee cap is price fixing
WASHINGTON (5/23/11)—Rep. Jim Renacci (R-Ohio) in a recent letter to Sen. Richard Durbin said the Illinois Democrat could remain consistent with his recent “commitment to ending price fixing” by allowing a vote on Senate legislation that would delay the implementation of debit card interchange fee rate cap regulations. Renacci referenced a recent Durbin letter to the Federal Trade Commission in which the Illinois legislator called the practice of price fixing “beyond reproach.” The Ohio-based House member, Renacci, said that he fully supports “the concept that consumers should not be subject to an artificial price set on a good or service integral to day-to-day life. “Whether set by the private sector or government, an artificial price undermines the spirit of capitalism and the free markets on which our society relies,” Renacci added. Sen. Durbin was the author of interchange language added at the eleventh hour to the Dodd-Frank Wall Street Reform Act. That amendment requires the Federal Reserve Board to set a cap on debit card interchange fees. That cap could be as low as seven-to-12 cents per transaction. Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) have introduced S. 575 to delay implementation of the cap. That legislation originally proposed a 24 month delay to allow time to study the impact of the interchange provisions, but Tester last week said that he would adjust his proposed delay to 15-months after some Senate colleagues indicated they thought the 24-month delay was too long. Tester in remarks made before the Senate added that he considered 15 months to be the "the bare minimum" to get a study of the issues "right." The 15-month delay would be broken into three periods: six-months to study issues surrounding government imposition of a cap on what card issuers may charge for use of the debit card system, six months for the Federal Reserve to rewrite rules to implement the Dodd-Frank Wall Street Reform provision, and three months to implement rules. S. 575 had 16 cosponsors as of Friday. Absent a delay, the Fed’s interchange provisions are scheduled to come into effect on July 21. A final version of the proposal, however, has not yet been offered by the Fed.


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