ABC News' Sunlen Miller (@sunlenmiller) reports:
A majority of senators voted in favor of a delay on capping the bank fees for debit card swipes. But the vote, 54-45, fell six votes shy of the 60 it needed to pass.
The debate over debit card swipe fees will open up on the Senate floor today, with a vote expected midday on the processing fees financial firms charge merchants every time a debit card is swiped, pitting retailers against bankers and some Democrats against fellow Democrats.
Senator Jon Tester’s, D-Mont., amendment, tweaked slightly on Tuesday, would delay the implementation of the Dodd-Frank Wall Street reform law, which cuts to 12-cent fee cap that banks charge retailers for debit card transactions.
Tester argues that small banks and credit unions will be less profitable, “penalized” and “wiped out” by this rule and if debit interchange fees are regulated, then there needs to be a better understanding of all the costs associated with transactions first.
Tester has argued that the swipe fees amendment adopted last year will have unintended consequences for consumers – who rely on small local banks and credit unions –who are forced to make up for their losses by raising rates on checking accounts and charging higher fees for small businesses looking for loans.
“Local community banks and credit unions would end up being subject to the same one-size-fits-all regulation designed to address the excesses of some of the world’s largest financial institutions,” Tester said Tuesday on the Senate floor, “those big Wall Street banks will be fine. They have plenty of sources of revenue. No one needs to shed a tear for them. But Main Street banks and credit unions will not be ok if these rules are implemented.”
The vote is slated for 2 p.m. on the Senate floor and needs 60 votes to pass as an amendment to the Economic Development Administration Reauthorization bill.
Without charges, the system will be implemented on July 21 and has already generated a lot of controversy – among the issuing banks, the credit card industry, consumers and on the Senate floor, pitting even Democrats against each other.
Senator Tester first proposed a two-year delay of the Fed’s rules to allow adequate time to study the impact on small banks and re-write the rules based on what is learned in the study. Yesterday, the amendment was updated to a six-month study to see whether the rules can protect small banks, too – looking at all the costs associated with debit card transactions.
But opponents argue that Tester is really siding with big banks over consumers and small banks.
On the Senate floor this morning Sen. Durbin (D-IL) – who opposes Tester’s amendment – said this would be a blow to small businesses, who want a “reasonable” interchange fee and a win for big banks.
“It is a bankers compromise for a banker’s benefit,” Durbin said, noting that there is opposition running wide – among retailers, universalities, national and state merchant trade associations and small businesses – to Tester’s amendment.
It is not clear yet if Tester has the 60 votes needed to avoid a filibuster from his own party. On late Tuesday night Senate Banking Committee Chairman Tim Johnson (D-SD) announced his intention to support the amendment, though.
“This modest, bipartisan proposal does not repeal the debit interchange amendment, but simply asks the regulators to take just a little more time to study and get it right,” Johnson said Tuesday in a paper statement.