A national bank in Minnesota has filed a suit in federal court challenging the constitutionality of the Durbin Amendment.
Congress included the Durbin Amendment in the recent financial services reform law. It directs the Federal Reserve Board to set a rate of debit card interchange for banks of $10 billion or more in assets. The measure also instructed the Federal Reserve to limit the debit card interchange level to reflect only the costs related to authorizing, clearing and settling debit card transactions.
TCF National Bank, a subsidiary of TCF Financial Corporation, charged that the result will be "an irrational competitive disadvantage" for banks that will be subject to the new regulation.
"We believe these provisions violate our Constitutional rights on three separate grounds: the regulations take our property without just compensation and without due process of law; and they also deny us equal protection under the law," said William Cooper, chairman and CEO of TCF Financial.
"The statute makes no more sense than regulating the price of a Burger King hamburger solely to the costs of the meat and the bun. To stay in business, Burger King has to sell burgers at prices that cover more than those costs; it also has to cover costs such as paying an employee to make the hamburger and another employee to serve it, the cost of the building and maintenance, as well as the costs incurred to advertise and promote the product. Under the Durbin Amendment, TCF only gets to recover the cost of the bun!"