UPDATE 1-Federal Reserve to appeal ruling on swipe fee for debit cards -lawyer
WASHINGTON, Aug 21 (Reuters) - The U.S. Federal Reserve wants its rule limiting debit card transaction fees to remain in place while the regulator appeals a judge's decision rejecting the Fed's "swipe fee" cap, a top Fed lawyer said on Wednesday.
The 2010 Dodd-Frank Wall Street reform law called for the Fed to limit the fees banks charge merchants when customers use debit cards.
Judge Richard Leon of the U.S. District Court for the District of Columbia ruled in late July that the Fed's fee cap of 21 cents per transaction was higher than Congress intended.
Last week, Leon ordered the regulator to determine whether it could write an interim rule lowering the cap, which would take effect immediately but could be adjusted later, and to report back to him on how long that would take.
Scott Alvarez, the Fed's general counsel, told Leon in court on Wednesday that the agency would instead ask to keep the current fee cap in place while the Fed appeals the ruling.
Attorneys representing retail groups and banks said they would have to change their systems to comply with an interim rule, even though an appeals court might wind up validating the original swipe fee cap.
"Switching back and forth is something that imposes costs on everybody," said Seth Waxman, an attorney with WilmerHale. He spoke on behalf of the a number of banking industry trade groups, including the American Bankers Association, which were not directly involved in the lawsuit.
Leon said he would "keep an open mind" as he considered whether to keep the current rule in place during the appeal. Alvarez said if Leon did not stay his ruling, the Fed would ask the appeals court to do so.
Lawmakers included the fee cap in Dodd-Frank in hopes it would trickle down to consumers in the form of lower prices.
The Fed set the cap at 21 cents in 2011. But retailers argued the Fed had caved to lobbying by banks for a higher fee cap than retailers were expected.
The National Retail Federation and other groups filed a lawsuit to overturn the Fed's cap. The judge's eventual decision to rule in their favor dragged down shares of card companies Visa Inc and MasterCard Inc.