FOR IMMEDIATE RELEASE
U.S. District Court Decision Will Increase $6 Billion Windfall for Retailers under Durbin Amendment
Coalition urges Federal Reserve to appeal decision to prevent even greater harm to consumers
Washington, D.C. (July 31, 2013)—A broad coalition of trade associations representing thousands of financial institutions today criticized the decision by the U.S. District Court for the District of Columbia to increase the $6 billion windfall now being enjoyed by large merchants at the expense of consumers. The Court struck down the Federal Reserve’s price caps on debit interchange fees, ruling that the caps allowed financial institutions to recover too many costs.
"This is an extraordinary decision that will have major repercussions for customers of both small and large financial institutions," said coalition spokesman Chris Matthews. "The Fed’s rule was already causing consumer harm and now it looks like it will only get worse. If the past is any indication, the merchants will add even more to their $6 billion windfall, and consumers will still see none of the promised benefits."
Representatives of smaller institutions also criticized the decision noting that their customers are already being harmed by the price caps. "It is disheartening that the retailers continue to add to their windfall while failing to live up to their promises of lower prices. While there is technically an exemption for certain financial institutions, community banks and their customers will be hurt by the Durbin amendment's price controls," said Camden R. Fine, president and CEO of the Independent Community Bankers of America. "We're very concerned that any new version of the caps will leave them in an even worse position."
The merchants, who had initiated a multi-year lobbying effort to impose price controls, sued the Federal Reserve Board in an effort to lower the Board’s caps even further. While arguing that consumers would benefit from lower retail prices, one year later, there is no evidence that prices have come down as a result. The trade associations had filed a friend-of-the-court brief in opposition and participated in oral arguments, arguing that the Federal Reserve's existing price caps did not allow card issuers to cover their costs while receiving a reasonable return on their investments.
The coalition includes: Credit Union National Association; Independent Community Bankers of America; National Association of Federal Credit Unions; National Bankers Association; Midsize Bank Coalition of America; Consumer Bankers Association; The Clearing House Association; American Bankers Association; and The Financial Services Roundtable.
The Independent Community Bankers of America®, the nation’s voice for nearly 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.