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TCF interchange arguments set for June 16
WASHINGTON (6/13/11)—The next stage of TCF National Bank’s appeal to block the Federal Reserve's implementation of proposed debit card interchange fee cap regulations will take place on June 16, when the U.S. Court of Appeals for the Eighth Circuit hears oral arguments regarding a preliminary injunction. Those arguments will take place at 1:30 p.m. CT in St. Louis, Missouri before a three judge panel. TCF's initial lawsuit, which was filed in October, alleged that the government cannot constitutionally write laws--such as the interchange law--that would arbitrarily prevent a business from recovering its costs sufficiently to avoid losses on its business operations. The suit also included other constitutional arguments. The U.S. District Court for the District of South Dakota in Sioux Falls in April denied TCF's motion for a preliminary injunction, but did not dismiss the case. The Fed has countered TCF’s argument in its own appeals court brief, stating that nothing in TCF’s contract with Visa “guarantees any minimum interchange fee or even limits the circumstances in which Visa can reduce the fee schedule." The Fed added that the district court found that "there is no statutory or contractual provision guaranteeing TCF a certain level of interchange income." CUNA, 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 have joined to support some aspects of TCF’s arguments via an amicus brief. With a legislative solution to the interchange implementation issue off the table for now, Credit Union National Association President/CEO Bill Cheney said that credit unions are focusing on the legal and regulatory systems to challenge the pending debit interchange fee cap. CUNA has developed a list of 13 specific points senators should be asked to make to the Fed, including asking the agency to require the card networks to report to the Fed that they have developed a two-tiered system that will provide higher fee income for small issuers than the board allows for large issuers. For prior coverage of this case and the general interchange issue, use the resource links.


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