By Marc Seltzer; originally published on May 13, 2010, at care2.com
A Senate amendment to the comprehensive financial reform legislation directs the Federal Reserve to cap retail debit card transaction fees at a level that is “reasonable and proportional” to the cost of processing the transactions. Sixty-four Senators sided with retailers over banking industry objections. 33 opposed.
The restrictions are not contained in the House version of financial reform that passed in December. Thus, if the current bill passes the full Senate vote, the provision will still have to make it into the final legislation during reconciliation of the House and Senate bills. The banking lobbyists will push hard to stop the final legislation from containing the restrictions, which could cost banks billions of dollars.
Anger at banks has shifted the power in the Senate towards small businesses and away from large banks, for the time being. The amendment was written by Senator Dick Durbin, Democratic whip, and brought for a vote by Senator Chris Dodd of Connecticut, who is managing the financial reform legislation as Chairman of the Senate Banking Committee.
Some of the savings would likely be passed from retailers to customers, especially in highly competitive markets like groceries and chain stores.
The law would only apply to large banks and would not apply to credit card transaction fees. Still, it would give retailers a path to lower transaction costs.
The Columbia Journalism Review covered the change and noted that the press has been fairly mute on amendments to the financial reform bill and poor in explaining what’s at stake. Spotty Coverage of the Financial Reform Amendments More information is available: Reuters reporting, ProgressiveOhio
Marc Seltzer is also a contributor to SupremePodcast.com and Redefining America: Constitution and Leadership 2010.