Federal Reserve Chairman Ben Bernanke again told lawmakers Thursday that “there are good reasons” to be concerned about whether the exemption for small debit card issuers on the debit interchange rule could work.
“It's going to affect revenue of small issuers. And it could result in some smaller banks being less profitable or even failing," Bernanke told the Senate Banking Committee in response to questions from Sen. Jon Tester (D-Mont.)
The lawmaker is sponsoring legislation that would delay the implementation of the Federal Reserve’s rule regulating debit interchange fees by two years while financial regulators, including the NCUA, study the issue.
Tester has said he has the 60 votes needed to defeat a likely filibuster but hasn’t found a legislative vehicle to attach it to. The Fed has been drafting the rule as a result of the Durbin Amendment to last year’s financial overhaul bill. The amendment was sponsored by Sen. Majority Whip Richard Durbin (D-Ill.)
The Fed issued a drafted rule in December and was supposed to issue a final rule next month but has been delayed in doing so because it is still going through the large number of comments it received on the proposal. The final rule is supposed to take effect in July.
Acording to the proposed rule, the allowable costs for interchange would be limited to no more than the issuer's allowable costs divided by the number of electronic debit transactions on which the issuer received or charged an interchange transaction fee in the calendar year. Or the issuer could receive debit interchange capped at 12 cents per transaction.