Bernake Press Conference - 2:15 April 27, 2011

Bernake Press Conference - 2:15 April 27, 2011

A Tester Vote Could Be a Week Away

Could a vote on delaying implementation of the Durbin Interchange Amendment be far off? According to The Las Vegas Review Journal, maybe not. 

Senate Majority Harry Reid continues to work with both Sen. Jon Tester, D-Montana, and Senate Whip Dick Durbin, D-Illinois, on the details of Tester's bill, which would delay implementation of Durbin's long-sought cap on debit card interchange, says the Review Journal.

The Senate will try to finish consideration of its small business bill (S. 493) the week of May 2. The article suggests a vote on the Tester amendment is likely.

On the House side, the Financial Services Committee released a tentative May hearing/mark up schedule. Rep. Shelley Capito's bill (H.R. 1081) is nowhere to be found. The House continues, it appears, to be content to let action happen on the Tester Amendment first.

DIA.org will report on whether Federal Reserve Chairman Ben Bernanke provides any information on the final rule's timing at his press conference--as well as the Senate's floor schedule for May 2.

A Tester Vote Could Be a Week Away

No News Is...No News

Hard news on debit card interchange was hard to come by this week as Congress finished its first week of recess and the Federal Reserve's April 21 deadline for issuing a final rule came and went like a passing stranger in a crowd.

April 21 was to be the critical day in the life (or death) of the Durbin Amendment.  "Delay Durbin" proponents, Sen. Durbin himself and the courts considering the TCF lawsuit all are awaiting a final rule before calculating next moves. We all know Chairman Bernanke told Congress weeks ago the Fed would not meet the Dodd-Frank April 21 deadline, but no one (including

Bernanke?) has any firm guess on when exactly the Fed will issue the final rule. Bernanke conducts his first ever "press conference" next week. Stay tuned here to see if he is asked about the final rule's timing and if he actually "makes news" here.

No News Is...No News

Measure Twice, Cut Once

As I mentioned in a previous blog, budget wrangling would consume Congressional energy and compress floor time for policy issues like the Durbin Interchange Amendment. This week certainly was no exception. And, with passage of legislation to fund the government through the end of the fiscal year, Congress is now taking its traditional April recess and won't return to Washington until May 2.

The Senate continued off and on consideration of a small business bill (S. 493) for the third consecutive week. The Tester Amendment to delay the Federal Reserve rule on debit card interchange remains pending to S. 493, but so do several other amendments. Senate leadership and the bill sponsors continue negotiations on the remaining amendments to be brought to a vote before final passage.

Yesterday, Sen. Tester (D-Montana) took advantage of some floor time to pitch his amendment once again. In a reasoned and deliberate speech to his colleagues, he defended his request to delay the implementation of Durbin so that lawmakers could get it right. He used the old carpenter metaphor of "measure twice, cut once." Speaking for rural America he defended the proposed delay so that interchange regulation will not adversely affect credit unions and community banks, which are an important part of the financial system for rural America. Take a look:



Sen. Durbin perhaps was too busy excoriating JPMChase CEO Jamie Diamond to jump to the floor and rebut Tester.

The House companion to the Tester effort (H.R. 1081) gained several more cosponsors this week (currently standing at 85). At this writing, the House appears likely to continue its position that the Senate act first.

Measure Twice, Cut Once

Tester and Frank Drive News of the Week

Frustration defined is watching the U.S. Senate trying to pass bill on the Floor. The Senate's attention this week was dedicated to the small business bill (S. 493) and government shutdown/budget talks. Sen. Jon Tester's amendment (#267) to delay implementation of the interchange debit card rules remains pending to the small business bill, but no agreement has been reached to call it up for a vote at this writing.

Sen. Tester took both to the Senate Floor and the media airwaves to tout his effort to delay and study the debit card rules. On CNBC's Squawkbox, Tester expressed confidence that he will have 60 votes in support of his amendment when called on the Floor. Sen. Richard Durbin also spoke on the Floor and with CNBC against any effort to delay implementation of his amendment.

On the House side, Rep. Barney Frank, former chair of the House Financial Services Committee, and one of the namesakes of the sweeping Dodd-Frank Wall Street Reform Act, made news by supporting legislation that would delay implementation of the Durbin Amendment. The House bill (H.R. 1081) gained more bipartisan co-sponsors this week (current total is 71). Frank's support for delay makes it a near certainty the House can pass a bill with a strong, bipartisan majority.

This takes brings us back to the Senate.. The Senate Floor schedule for next week has not been announced and it is unclear how a possible government shut down will affect Floor activity. We do know both the House and Senate are scheduled for a two week recess (Apr. 18-29). Again, a government shutdown could call into question that schedule as well.

The legislative process, above all else, requires patience sprinkled with some humor.

Tester and Frank Drive News of the Week

Bernanke Cannot Make Durbin Deadline -- Tester Swings into Action

Last week's blog suggested little or no legislative action to delay implementation of the Durbin Amendment interchange rules until the Federal Reserve issues the final rules (on or by April 21).

Fed Chairman Ben Bernanke threw a major monkey wrench into the entire process last week by telling Congress that the Fed would miss the April 21 deadline and offered no guidance as to exactly when the final rules would be published. In his letter to Congress, Bernanke wrote that the Fed was however committed to the July 21 implementation date. He cited the high volume of comment letters (more than 11,000) and the complexity of the issues as the two main reasons the April 21 deadline could not be met.

The same day Bernanke sent Congress the letter, Sen. Jon Tester (D-MT) filed an amendment to a small business bill (S. 493) pending on the Senate Floor. The amendment is the exact text of S. 575, Sen. Tester's legislation to delay and study the Durbin Amendment. Sens. Durbin and Tester spoke on the Senate Floor last Thursday in support of their competing efforts on interchange.

Sen. Tester told CNBC that he's confident his amendment has the 60 votes necessary to overcome a threatened filibuster from Sen. Durbin. The Senate adjourned last week without completing action on S. 493 and will resume its consideration this week. If Sen. Tester cannot get a vote on his amendment to the small business bill, he will look for other legislation on which to attach it, perhaps a continuing resolution.  EFTA has written a letter (posted under Important Links- “EFTA Tells Congress It Supports a Delay in Durbin Implementation”) to Congress expressing its support for the Tester Bill.

Financial service providers were already facing a daunting 90 day timeline from the issuance of the final rules on April 21 to the July 21 implementation date. Once Chairman Bernanke announced the Fed was compressing that timeline, proponents to delay and study the Durbin Amendment gained an advantage. We will soon see if this translates into a positive vote in the Senate.

EFTA has also written a letter to Chairman Bernanke expressing our strong believe that the industry needs at least 90 and more likely 180 days from the publication of final rules in order to make and test the changes necessitated by those rules.

Bernanke Cannot Make Durbin Deadline -- Tester Swings into Action

It’s not the Little Big Horn but It Could Be Big, Nevertheless

Sioux Fall, South Dakota is about a thousand miles from the U.S. Capitol, but a battle is shaping up there today which could affect implementation of the Durbin Interchange Amendment and the Federal Reserve’s proposed rules governing debit card interchange fees.

Today the government and TCF National Bank are all lawyered up in Judge Lawrence Piersol’s courtroom debating whether Congress has the right to impose price caps on banks that issue debit cards. TCF says the law is unconstitutional. The government says TCF’s claim has no merit.

At stake is the more than $16 billion that banks collect each year, according to the Fed, in what merchants call “swipe fees.”  Swipe fees is term that could have only been coined for the retail industry by a modern day Don Draper. It is a term that denotes a brief, fleeting, ephemeral action (the swipe), as delicate as gossamer—but which costs merchants 16 billion large every year (the fees). Sixteen billion is how deeply in debt the state of California was in 2008. Sixteen billion is what Southwestern Bell paid for AT&T in 2005. It’s what Microsoft earned in 2010.

Swipe fees understates the value of card acceptance and overstates the burden to merchants, skewing the argument and manipulating public opinion. As such it is positively brilliant.

Meanwhile back at the Capitol, Congress is considering delaying the implementation of the Durbin Amendment. While the Fed lawyers are busy in Judge Piersol’s courtroom, Fed analysts continue to comb through 11,000 comment letters received in response to the agency’s proposed Durbin rules.

Smart money says there’ll be a delay in implementing the Durbin rules. TCF’s Battle of Sioux Falls? A toss-up. But I wouldn’t put $16 billion on the outcome of either battle.

It’s not the Little Big Horn but It Could Be Big, Nevertheless