Congress won't move quickly on 'swipe' fee changes

The U.S. House Financial Services Committee won't immediately push for legislative changes to a Federal Reserve proposal to cap debit-card "swipe" fees, its new chairman said Wednesday.

The cap on "swipe" fees is a key issue for Wayzata-based TCF Financial, which has sued the Fed to block the proposal. The bank relies heavily on fee income and says the cap would cost it $80 million per year in lost revenue.

"I'm sure at some point there will be a hearing" on the issue, Rep. Spencer Bachus, R-Alabama, said Wednesday in an interview. "I think job creation and some other matters are going to go first."

Rep. Barney Frank of Massachusetts, the panel's top Democrat, has said he will work with Republicans if they pursue changes to the rules required by the Dodd-Frank Act. That law, enacted in July, requires the Fed to complete rulemaking by April 21 and put the change into effect by July 21.

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There is no consensus on how to change the law, irrespective of Frank's comments, Bachus said. "We have some bipartisan discussions to have," he said.

The committee, later in the day, announced that a hearing on the Fed's interchange proposal is tentatively scheduled for Feb. 17. The panel and its subcommittees have seven other hearings scheduled before that date.

The Fed has proposed capping so-called debit interchange fees charged to merchants at a flat 12 cents for each transaction, replacing a formula that averages about 1 percent of the purchase price. Credit-card interchange fees, which average about 2 percent, remain untouched.

Debit interchange fees totaled $16.2 billion in 2009, according to a document outlining the Fed's proposed rules.

The Fed's proposed limits may reduce annual revenue for U.S. banks by more than $12 billion. Visa Inc. and MasterCard Inc., which set the fees and pass the money to card-issuing banks, tumbled more than 10 percent after the plan was made public on Dec. 16, based on investor concern that the caps will damage their business model.

Frank, in an interview last week, said he wasn't sure whether "the consumer ever sees the benefit" of the new rules.

Bachus, who took over the committee chairmanship from Frank this month, filed a comment letter with the Fed in December requesting that the central bank slow down its rulemaking process on the issue. He didn't say in the letter what changes he would seek to the rules.

Any House effort to change the law would run up against opposition in the Senate, most notably from the chamber's second-ranked Democrat. Senate Majority Whip Richard Durbin of Illinois wrote the interchange provision in Dodd-Frank and has said he will defend it against any repeal or delay efforts.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, cast more doubt on future legislative proposals Wednesday when he said he didn't think the Obama administration "is interested in revisiting the issue." McConnell made the remarks at a Politico policy breakfast held in Washington.