A portion of the business community has filed suit against the Federal Reserve, as Jim McTague documents in the latest Barron’s:
The Federal Reserve Board is the defendant in one of the most closely-watched lawsuits, which was brought by retailers, restaurateurs, supermarkets, department stores, and gas and convenience store owners claiming to be pinched by exorbitantly high debit-card interchange and network fees charged by banks to cover the cost of transmitting, authorizing and clearing every purchase. In 2010, Congress, in response to merchant complaints about skyrocketing fees for debit cards, bestowed on the Fed the power to set debit-card fees. Credit-card fees were unaffected by the law. The Fed last year promulgated a new fee schedule that reduced debit-card fees to about 12 cents per transaction, from about 44 cents. The final rule allowed the banks to charge about 24 cents. The merchants sued, claiming that the Fed did not reduce fees enough.
“The Fed basically has ignored what the law said and gone far afield,” says Mallory Duncan, general counsel for the National Retail Federation.
The Fed, in a recent motion to dismiss the suit, argued that the Durbin Amendment’s language is “silent and ambiguous” to permit it to make reasonable assumptions about the expenses. The lawsuit adds to huge cloud of uncertainty hanging over the banking sector, where the risks rise more rapidly than the rewards.
Economic uncertainty? We certainly need more of that factor in our lives.
