TFC Bank on Thursday asked a federal judge to withdraw itslawsuit against the Federal Reserve challenging the legality of theDurbin Amendment.

The Minnesota bank's move came a day after the Federal Reserveissued its final rule setting a 21-cent cap on debitinterchange fees plus a an approximately four-cent allowance forfraud prevention and losses, and a federal appeals court in St.Louis dismissed the bank's request to delay the implementation ofthe Durbin Amendment.

“While we continue to believe that the Durbin Amendment isunconstitutional because it requires below-cost pricing and exempts99% of all U.S. banks, we believe our lawsuit has served itspurpose in demonstrating the unfairness of the Durbin Amendment andthat it is time for us to move on,” William A. Cooper, the bank'schairman and CEO said in a statement. “The Federal Reserve Board'sfinal rule is an improvement from its initial proposal andrecognizes many of the points we made in our case.”

Both CUNA and NAFCU signed two friend-of-the -court briefs on behalf of TCF, which hasbranches throughout the Midwest.

The Durbin Amendment, which was part of the financial overhaul billpassed by Congress last year, mandated that the Fed write a rulelimiting interchange fees on debit card transactions.

The Fed's proposed rule would have capped the fees at 12 centsper transaction with no allowance for fraud prevention. The finalissued Wednesday took some of the recommendations by credit unionsand banks to allow for fraud prevention.

The rule takes effect on Oct. 1.

Financial service institutions and retailers criticized the Fedrule. Credit unions and small banks said they fear that the Fedwon't be able to ensure that the exemption for institutions withassets of $10 billion or less will be protected.

Retailers said the interchange fee is still too high.