The Durbin argument continues…
Arguing that a federal appeals court “disregarded the plain letter of the statute,” a group of merchants and merchant associations is preparing a request to the U.S. Supreme Court to review a case in which it is battling to overturn the Federal Reserve Board’s interpretation of the Durbin Amendment’s debit card interchange restrictions and routing rules. To read the full article Though Facing Slim Odds, A Merchant Group Takes Its Durbin Case to the Supreme Court
A nice summary of the recent decision was written in an article by Stephen G. Harvey and Seth William Stern for the American Bar stating that on March 21, 2014, in a significant victory for banks and credit unions that issue debit cards and for the companies that own and operate debit card networks (i.e., Visa and MasterCard), the DC Circuit upheld the Federal Reserve Board’s Regulation II, which implemented the Durbin Amendment to the Dodd-Frank Act by capping interchange fees for large issuers at 21 cents plus 5 basis points for fraud losses. It also requires banks to offer at least two unaffiliated networks for processing debit card transactions.
The decision represents a reversal of fortune for the retailers who challenged Regulation II and won in the trial court. In July 2013, federal district judge Richard Leon chastised the Fed for supposedly ignoring the clear intent of Congress, but the court of appeals in reversing Judge Leon laid the blame on Congress: “Congress put the Board, the district court, and us in a real bind. Perhaps unsurprising given that the Durbin Amendment was crafted in conference committee at the eleventh hour, its language is confusing and its structure convoluted.” The DC Circuit decision upholding Regulation II, with the exception of one minor issue remanded to the Fed, resolves any uncertainty about Regulation II, barring review by the Supreme Court, which is unlikely. To read the full article: DC CIRCUIT SIDES WITH FEDERAL RESERVE BOARD ON MEANING OF DURBIN AMENDMENT TO DODD-FRANK ACT