Trade associations demonstrate that flawed Fed price controls provide retailers with massive windfall at the expense of consumers and financial institutions of all sizes
WASHINGTON--(BUSINESS WIRE)-- A broad coalition of trade associations representing thousands of financial institutions today argued before the U.S. District Court for the District of Columbia as an amici in the lawsuit brought by some of the nation’s largest merchants in an effort to increase the $6 billion-plus windfall they are receiving from the Federal Reserve Board’s June 2011 Final Rule on interchange fees.
The coalition’s argument demonstrated that the Rule is fundamentally flawed because it contravenes the Durbin Amendment by imposing caps on interchange fees that fall far short of allowing debit card issuers to cover their costs and a reasonable rate of return on their investments.
“The merchants have claimed all along that imposing government price controls on interchange fees would directly benefit consumers, yet there is absolutely no evidence that consumers are benefitting,” said coalition spokeswoman Trish Wexler. “So while consumers have gotten nothing from the retailers, the merchants are back asking the courts to add even more to the $6 billion windfall they are now enjoying.”
“Credit unions are already feeling the pinch of the Durbin amendment’s rate cap, despite the exemption for institutions with less than $10 billion in assets,” said Fred Becker, president and CEO of the National Association of Federal Credit Unions. “The government should not set market prices.”
The coalition that filed the Amicus Brief and was represented in court today includes: Credit Union National Association; Independent Community Bankers of America; National Association of Federal Credit Unions; Midsize Bank Coalition of America; Consumer Bankers Association; The Clearing House Association; American Bankers Association; The Clearing House Payments Company; and The Financial Services Roundtable.
for The Clearing House
Trish Wexler, 202-772-6957
twexler@voxglobal.com
Source: The Clearing House