Bankers praise Supreme Court decision to let interchange ruling stand
On Tuesday January 20, 2015, financial services industry associations welcomed the U.S. Supreme Court’s decision not to weigh in on a court of appeals ruling in NACS, the Association for Convenience and Fuel Retailing, v. Board of Governors of the Federal Reserve System.
The appeals court had previously rejected retailers’ efforts to increase a $6 billion annual windfall secured by the Fed’s interchange price cap rule pursuant to the Durbin Amendment, according to a news release from the Independent Community Bankers Association. After successfully lobbying Congress to impose interchange controls, merchants sued the Federal Reserve Board in an effort to lower the caps further.
While the merchants argue that consumers would benefit from lower retail prices, there is no evidence that prices have come down as a result, the release said.
A coalition of financial trade associations filed friend-of-the-court briefs before both the district court and court of appeals, and participated in oral arguments in both courts, asserting that even the Federal Reserve’s price caps did not allow card issuers to cover their costs while receiving a reasonable return on their investments.
Following are selected statements from trade association leaders following the Supreme Court decision:
We shouldn’t lose sight of the fact that the Durbin price caps and the Fed’s interpretation do absolutely nothing to lower prices, while harming consumers and handing billions of dollars to the biggest merchants. Despite the merchants’ promises, there is zero evidence that they have lowered prices as a result of the Fed’s rule. — Paul Saltzman, President, Clearing House Association.
The Supreme Court has reached the right result today, but we shouldn’t lose sight of the fact that the underlying policy — the Durbin Amendment — has not accomplished its goal of lowering prices for consumers. At the end of the day, American consumers have paid the price for the efforts of big-box retailers to line their pockets at their own customers’ expense. — Frank Keating, President and CEO, American Bankers Association.
Reasonable minds have prevailed in denying a writ of certiorari. Government-mandated price controls, known as the Durbin Amendment, have yet to work as advertised and retailers still have not proved savings have been passed on to consumers. Make no mistake about it — consumers must come first in this process, not the bottom line of retailers. This drawn-out fight should put on notice those Members of Congress who insist upon interfering with the free market. —Richard Hunt, President and CEO, Consumer Bankers Association.
NAFCU (National Association of Federal Credit Unions) is pleased the Supreme Court will not reconsider the court of appeals decision in NACS v. Board of Governors of the Federal Reserve. This will help maintain stability in the marketplace, which is good for consumers and credit union members. NAFCU remains concerned that the current interchange cap imposes below-cost caps on interchange fees and fails to provide for a reasonable return for credit unions. — Carrie Hunt, Senior Vice President of Government Affairs and General Counsel, National Association of Federal Credit Unions.