by. Henry Meier
Call it the Thriller in Manilla. With potentially billions of dollars at stake, on Friday Judge Leon agreed to a joint request of both the merchants and financial institutions to stay his ruling invalidating the Federal Reserve’s Interchange Fee Cap until a federal appeals court decides whether Judge Leon got it right when he ruled that the Fed ignored Congressional intent when it imposed a $0.21 interchange fee cap. It also appears that the appeal will be heard on an expedited basis with the Federal Reserve’s and supporting amicus briefs (e.g. CUNA and NAFCU, among others) due October 21 with our good friends the merchants having 30 days to respond. This means we should have a decision no later than early next year, which in terms of an appellate case is faster than the speed of light.
The best piece of news I saw in the papers supporting an expedited appeal is that the merchants concede that there is no basis for retroactively making financial institutions pay them for the money they’ve “lost” as a result of the allegedly excessive interchange fee cap. Specifically, in their joint filing with banks, the merchants argue that while they have lost approximately $4 billion, “it is doubtful that this court (the court of appeals) or the district court could order the Board to require regulated banks to refund already paid interchange fees as part of any rule-making.” Judge Leon earlier suggested that he might have the power to order such compensation for the merchants.
Although the appeal allows a fresh set of eyes to examine the issues, the parameters of the legal debate basically come down to one question. Was the Durbin Amendment so clearly written that the Federal Reserve Board abused its discretion when it promulgated these regulations?continue reading »