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TCF appeals interchange case ruling
WASHINGTON (4/18/11)--TCF National Bank (TCF) last week again sought to block the Federal Reserve’s implementation of proposed interchange fee cap regulations by appealing a recent ruling in its case against the Fed. The bank’s expedited appeal request was filed in the U.S. Court of Appeals for the Eighth Circuit. The appeal relates to an April 4 ruling in which U.S. District Court for the District of South Dakota Judge Lawrence Piersol declined to dismiss TCF's suit against the Fed--but also declined to issue an injunction based on the statute. Credit Union National Association (CUNA) General Counsel Eric Richard said that CUNA would “continue to monitor this litigation closely, and will do whatever needs to be done to protect the interests of credit unions.” The TCF suit, which was 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. It also alleges that portions of the Dodd-Frank Act that would require the Federal Reserve to set restrictions on debit card interchange fees are unconstitutional. In the suit, TCF also argues that the Fed's implementation plan restricts a financial institution's ability to recover costs associated with providing the debit card service. CUNA, the Clearing House Association L.L.C., 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 have backed TCF in its suit. CUNA and the other groups are backing TCF in an effort to explain the detrimental effect that the Fed's interchange provisions would have on the "stability of the electronic payment structure that undergirds literally trillions of dollars of our economy, as well as the serious constitutional issues the (Fed's) action raises." The Fed's interchange fee rate cap regulations could lower interchange fees to no more than 12 cents per transaction. As indicated by Fed Chairman Ben Bernanke, the Fed is not expected to meet the April 21 statutory deadline for releasing a final regulation on the interchange fee cap provisions. However, the Chairman indicated his commitment to approve a final rule by the July 21 effective date, if not sooner.


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