The U.S. Federal Reserve on Wednesday appealed a judge’s decision to reject the agency’s cap on debit card transaction fees, Reuters reported.
Judge Richard Leon of the U.S. District Court for the District of Columbia ruled in late July that the Fed’s fee cap of 21 cents per transaction was higher than Congress intended.
“The Federal Reserve’s decision to appeal is the right thing to do for consumers who value debit cards and the financial institutions that serve them,” Frank Keating, president of the American Bankers Association, said in a statement on Wednesday.
“We are very disappointed to see the Fed giving in to the banks,” said National Retail Federation (NRF) Vice President for Government Affairs Public Relations J. Craig Shearman. “The facts are very clear that the Fed set the cap far higher than intended by Congress, and the court has insisted that the mistake be fixed as soon as possible. Instead, the Fed has taken a position that will drag this out while retailers and their customers continue to pay billions of dollars in inflated fees that harm that U.S. economy. We want to see this case resolved today, not next year, so these fees can finally be brought under control.”
Last week, Judge Leon ordered the Fed to determine whether it could write an interim rule lowering the cap, which would take effect immediately but could be adjusted later, and to report back to him on how long that would take, Reuters reported.
Scott Alvarez, the Fed’s general counsel, told Leon in court on Wednesday that the agency would prefer to keep the current fee cap in place while it went through the appeals process.
Alvarez said it would be unreasonable to ask the Fed to craft new fee limits at the same time that the agency was asking an appeals court to approve its initial cap.
Attorneys representing retail groups and banks both said they would have to change their systems to comply with an interim rule, even though an appeals court might wind up validating the original swipe fee cap.
Alvarez said if Leon did not stay his ruling, the Fed would ask the appeals court to do so. Leon said he would “keep an open mind” as he considered it.