Mon, Sep 2, 2013
Washington, District Of Columbia
Federal Reserve Board General Counsel Scott Alvarez said the Fed plans to appeal a recent district court decision that invalidated the agency's debit interchange fee rule. The U.S. District Court judge currently handling the case said that he would allow the status quo to be maintained for now.
Following the afternoon hearing, Credit Union National Association President/CEO Bill Cheney said CUNA is relieved to learn that the Fed is defending its rule.
"Although the Fed's rule is far from perfect for credit unions, the district court's decision compounds Durbin's already negative consequences and is the wrong result for consumers. We appreciate that the Fed is prepared to take this issue to the next level, and CUNA will do everything it can to ensure the D.C. Circuit Court of Appeals is aware of credit union concerns as the case moves forward," he added.
The Fed will also file a motion to expedite this appeal. An expedited appeal could bring the case to its conclusion within nine months to one year, litigators at the hearing said. Alvarez said the Fed wishes to bring this case to finality quickly, and would work expeditiously to address interchange case issues once the appeal is filed.
Leon said he is not inclined to let the interchange issue linger. Here are some other key points for credit unions highlighted by CUNA regulatory staff:
- Alvarez said the Fed would also request a stay of Leon's July 31 interchange decision. The Fed and merchant representatives both said they support a longer stay of Leon's order, pending a resolution of the Fed's appeal. "The Fed raised the possibility of the merchants having to live for a while in a world with no rule at all. The possibility of returning to a pre-Durbin world, even temporarily, might allow financial institutions to charge whatever they want for interchange fees," CUNA General Counsel Eric Richard said;
- CUNA agrees with the Fed's position that an interim rule is unnecessary here, because it would force all involved parties to adopt a new rule on a short-term basis when the original rule could ultimately be upheld by the D.C. Circuit Court. CUNA always wants to limit unnecessary compliance obligations on credit unions, and will strongly advocate for this position before the court; and
- Counsel for a group of financial institutions, including CUNA, told the judge Wednesday that the group is considering instituting new litigation on constitutional grounds should the Fed put in place an interim rule that does not allow financial institutions to recoup their investment.
Additional hearings in the case remain on the schedule: Briefs on a potential Fed interim interchange rule must be submitted by Aug. 28.
CUNA continues to closely follow the progress of this debit interchange case, and is exploring a variety of options to ensure credit unions' interests are protected going forward.
Source: CUNA News Now