Senator Jon Tester, the Montana Democrat who kicked off a flurry of lobbying from retailers and bankers when he sponsored legislation to delay the implementation of a reform on debit interchange or “swipe” fees, took to the Senate floor along with his co-sponsors today to present a proposal.
Tester’s original plan called for a two-year delay while the Fed studied the impact of the 12-cent fee cap it had proposed; he later scaled that down to 15 months. Now, the current timeline calls for up to a one-year delay in implementation.
While the Fed already collected cost information submitted by nearly 100 large banks and credit unions, some cost issues — such as how much banks spend to thwart fraud — weren’t addressed in the agency’s earlier report on debit interchange fees. Tester’s legislation would mandate that the Fed as well as other regulatory institutions take six months to study “the costs associated with debit transactions, the impact on consumers and the ‘small issuer exemption’ (for financial institutions with less than $10 billion in assets),” according to a memo distributed by Tester’s office. Following six months’ worth of study, if the Fed plus another regulator both come to the conclusion that the original rules were flawed, the agency will have six months to rewrite them.
[time-link title="(Read more on TIME Moneyland about the mounting Congressional war over swipe fees)" url=http://moneyland.time.com/2011/06/07/the-mounting-swipe-fee-war-over-32-cents/]
The proposal is being presented as an amendment to the Economic Development Administration Reauthorization bill. The Senate is expected to vote on the amendment on Wednesday, according to Senator Tester’s press office. The goal would to be to get the legislation through the House and into law before the initial deadline of July 21 for the fee cap to go into effect, although Politico points out the amendment may not have enough bipartisan support to survive a filibuster.