WASHINGTON – The Federal Reserve and CUNA with its coalition partners filed separate briefs with the U.S. District Court yesterday calling to maintain current interchange regulations as a case on the validity of those regulations moves forward. Both argued, in part, that the court does not have the authority to require the regulator to issue an interim rule while the Fed appeals the decision to vacate its debit card interchange cap rule.
Even the merchants coalition, the plaintiff in the case, called on the court to maintain current interchange regulations pending the results of a Fed appeal of the court's overturning its rule.
The judge last month struck down the Fed's rules on debit interchange fees and routing procedures. He ruled at that time that the Fed did not follow narrow congressional intent imposed by the Durbin amendment. Earlier this month, he asked for information on the feasibility of issuing an interim final interchange rule, and asked the Fed for an interim final rule implementation timeline.
The Fed said a stay "will preserve the status quo in the debit card industry while the Board's appeal proceeds, will prevent irreparable injury to plaintiffs in the form of a likely steep increase in interchange fees should the market return to its largely unregulated state prior to the Rule, and will avoid mooting the Board's appeal."
The Fed also argued against developing and releasing an interim final interchange regulation while the court case moves forward.
Even the merchant's coalition called on the court to maintain current interchange regulations pending the results of a Fed appeal. Maintaining the stay would "prevent substantial harm" that they believe could occur to the merchants if the protections of the Durbin Amendment's interchange regulation are left entirely unimplemented during the appeal process.
The merchants did, however, support forcing the Fed to issue an interim final rule.