Sen. Jon Tester succeeded in bringing legislation to the floor that would undo a policy on how banks charge retailers when consumers use bank cards. It was approved as part of the Dodd-Frank financial reform legislation.
The vote Democrats have been dreading comes today when they’re forced to choose between two powerful constituencies — retailers and banks.
With more than $1 billion a month at stake, the banks are making a last-ditch effort to line up 60 votes for Sen. Jon Tester’s (D-Mont.) attempt to relitigate a law requiring a reduction of debit card swipe fees charged to retailers.
The battle has been notable not only for the massive lobbying campaigns on both sides but for the internecine fighting in the Democratic ranks.
Senate Majority Whip Dick Durbin (D-Ill.) has ripped Tester’s amendment as another “Wall Street bailout” even as Tester faces a difficult re-election test next year. Durbin authored the law, which was part of last year’s financial regulation overhaul.
And Senators on both sides of the issue, including Tester, have been the subject of heavy advertising campaigns in their home states.
Tester, however, has warned that without changes to the swipe-fee law, small banks could go out of business and consumers could face higher bank fees — even though the law requires the Federal Reserve to exempt institutions worth less than $10 billion.
Senate Majority Leader Harry Reid has allowed the bruising intraparty fight to persist. The Nevada Democrat said Tuesday that he supports Durbin but is not lobbying anyone either way on the proposal. Reid’s hands-off approach has allowed what is seen in part as a proxy fight between Durbin and the No. 3 Democrat, Conference Vice Chairman Charles Schumer (N.Y.), to flourish.
Durbin, however, praised Reid for supporting his legislation from the start. Durbin noted that he could have objected to bringing the amendment up for a vote, but he said many people want the issue settled and a vote is the best way to do that.
“It’s a good test for the Senate,” Durbin said on the Senate floor. “I don’t know how it’s going to turn out. I won last year, but they’ve poured it on ever since.”
Tester’s latest revision would delay the implementation of new regulations on debit card fees for 12 months, said Sen. Bob Corker (Tenn.), the lead Republican sponsor.
But it would also allow banks more flexibility to maintain higher debit card fees by allowing them to use other expenses — not just the nominal cost of processing the payment itself — to justify their rates.
Durbin tore into the latest proposal Tuesday as simply more sleight of hand on the part of the biggest banks to protect their profits and large bonuses for executives.