America’s Credit Unions told the House Financial Services Committee something blunt this week: the Federal Reserve should kill its own 2023 proposal to cut debit interchange fee caps instead of leaving it in limbo while a federal court fight plays out.
The group’s letter, filed ahead of Fed Chair Kevin Warsh’s Tuesday testimony before the committee, notes the Fed has already conceded it won’t finalize the rule until litigation resolves. Its ask: stop half-committing and withdraw it outright.
The proposal amends Regulation II, the rule implementing the Durbin Amendment’s cap on debit swipe fees. It’s been under fire amid ongoing litigation over the rule’s legality.
Merchants and banks have fought this exact battle for years: merchants say the caps still run too high, banks say the fees fund fraud prevention and security. Credit unions, as debit card issuers themselves, sit on the banks’ side of that ledger.
The letter also asks the Fed to weigh the risks of giving uninsured nonbanks access to Reserve Bank master accounts, and wants Regulation CC’s five-day check-hold window shortened to cut fraud exposure.
Warsh made no commitment Tuesday. The litigation’s outcome, not this letter, is what actually settles Regulation II’s fate.
James Okafor