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News Center - Regulatory/Compliance |
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October 20, 2011
REGIONAL FED BANKS NEED IMPROVED TRANSPARENCY, GAO SAYS
The Government Accountability Office (GAO) said in a report released yesterday that the Federal Reserve should improve transparency at its 12 regional banks and should strengthen policies governing conflicts of interest.“Without more public disclosure of governance arrangements, such as board of director bylaws and director eligibility and ethics policies, there may be continued concerns about Reserve Bank governance and the integrity of the Federal Reserve,” the GAO said.
The report also noted that the regional banks’ six public directors are supposed to be drawn from the fields of agriculture, commerce, industry, services, labor, and consumer advocacy, but the latter two groups are underrepresented.The GAO recommended that the regional banks consider a wider range of candidates for their boards, document directors’ roles and responsibilities, request waivers when conflicts are possible, and post more governance documents on their websites.
July 27, 2011
Date Tapped to Run CFPB’s Daily Operations
Raj Date, an associate director at the Consumer Financial Protection Bureau, will replace Elizabeth Warren on Aug. 1 as the Obama administration's lead adviser in charge of running the bureau’s daily operations, the Treasury Department said yesterday.
Warren
will return to her position as a
Harvard
Law
School
professor.
Date, who serves as the CFPB’s associate director of research, markets and regulations, is a former Wall Street executive who has worked at Deutsche Bank Securities and Capital One Financial Corp.
President Obama on July 18 nominated former Ohio Attorney General Richard Cordray, who leads the CFPB’s enforcement division, to serve as the bureau’s director. His nomination is subject to Senate confirmation. Read more.
July 19, 2011
Obama Formally Nominates Cordray as CFPB Director
President Barack Obama has officially announced his nomination of Richard Cordray to serve as director of the Consumer Financial Protection Bureau. Cordray currently leads the CFPB’s enforcement division and previously served as
Ohio
’s Attorney General.
In his remarks after announcing the nomination Obama pledged to fight efforts to weaken Dodd-Frank Act reforms. “We’re not going to go back to the status quo where consumers couldn’t count on getting protections that they deserved. We’re not going to go back to a time when our whole economy was vulnerable to a massive financial crisis,” Obama said. “That’s why this bureau matters. I will fight any efforts to repeal or undermine the important changes that we passed.”
Meanwhile Senate Minority Leader Mitch McConnell (R-Ky.) reacted to the nomination by repeating GOP senators’ concerns about the CFPB’s lack of accountability, and renewing their May 5 vow to block any nomination unless changes are made to the bureau’s structure and funding. Read the president’s remarks. Read McConnell’s remarks.
Fed, FDIC Issue Final Rules Implementing Reg Q Repeal
The Federal Reserve and FDIC issued separate final rules to implement the Dodd-Frank Act-mandated repeal of the prohibition against paying interest on demand deposits that becomes effective July 21.
The Fed issued a final rule that repeals its Regulation Q, which prohibits the payment of such interest. The rule also repeals the Fed’s published interpretation of Reg Q and removes references to Reg Q found in the agency’s other regulations, interpretations and commentary.
The FDIC issued a final rule that rescinds its regulations that implemented the prohibition against paying interest on demand deposits. The rule also retains and moves the definition of “interest” from the FDIC’s regulations relating to interest on deposits to the agency’s regs on deposit insurance coverage.
The rule explains that a regulatory definition of “interest’ would still be useful in interpreting the requirements of the Dodd-Frank Act’s Section 343, which provides temporary, unlimited deposit insurance coverage for noninterest-bearing transaction accounts.
AmBA
in comment letters on May 16 had asked both the FDIC and Fed to give banks more time to prepare for the new operational and compliance demands involved in the July 21 repeal of the prohibition against paying interest on demand deposits. Read the Fed’s final rule. Read the FDIC’s final rule. For more information, contact
AmBA
's Denyette DePierro.
Warren
: CFPB Won’t Seek to Ban Certain Financial Products
The Consumer Financial Protection Bureau won’t seek to ban certain financial products, Treasury Department special adviser Elizabeth Warren told the House Oversight and Reform Committee yesterday.
Banning fraudulent financial products and services “is a tool in the toolbox, and that's where it should stay,” said Warren, who is overseeing the establishment of the CFPB. “We don’t have any present plans” to use it.
Ensuring that the markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation is a top priority for the CFPB, which officially goes into operation July 21, she said.
“From our first day of work, promoting transparency in the credit market and reducing what is buried in the fine print has been a core goal of the agency,”
Warren
said. “The CFPB is focused on making markets work, and this principle animates the bureau’s activities.” Read Warren’s testimony.
July 14, 2011
AmBA Suggests IRS Delay Effective Date of Revised Form 1099-C
AmBA yesterday strongly suggested that the Internal Revenue Service delay the Jan. 1, 2012, effective date for draft 2012 IRS Form 1099-C (Cancellation of Debt) because banks will need at least one year to upgrade their systems and train their employees to properly capture the new form’s changes.
“[W]e recommend that the IRS provide an effective date of Jan. 1 of the second calendar year following the year in which the revised form is finalized,” AmBA said in a comment letter.
“[I]f the revised form is finalized in 2011, the effective date of the [form] would be Jan. 1, 2013,”
AmBA
said. “The IRS would … be providing a necessary minimum one-year time frame [to] allow filers to make the required systems and procedure changes … [and] also be ensuring a smooth transition for reporting with a beginning-of-the year effective date.” Read the letter. For more information, contact
AmBA
's Fran Mordi.
The Federal Reserve yesterday published lists of banks that theoretically are subject to -- and are not subject to -- the debit-card interchange rule’s small-bank exemption for issuers with under $10 billion in assets.
The lists, which are intended to help payment card networks determine which issuers must adhere to the rule’s price caps, are part of the Fed’s attempt to reinforce the exemption and monitor its effectiveness. The Fed plans to update the lists annually.
The interchange rule becomes effective October 1. Read more. Read the exempt list. Read the nonexempt list.
AmBA, ABASA: Do Not Impose Margin Requirements on End-Users
Regulators should not impose margin requirements on end-users -- including banks -- that use uncleared swaps to hedge or mitigate commercial risk, AmBA and its AmBA Securities Association subsidiary said Monday in a comment letter.
The trade groups were commenting on a Dodd-Frank Act-mandated joint proposed rule that would establish margin and capital requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants.
“The vast majority of banks that use swaps do so in order to hedge or mitigate risks associated with lending and asset-liability management,”
AmBA
and ABASA said. “Since they use swaps the same way that nonfinancial entity end-users do and pose no greater risk to the swap entities and the
U.S.
financial system, they should not be subject to the margin requirements.”
They added that regulators also should not impose the proposed margin rules on affiliate transactions. “Affiliate transactions are distinctly different from swap transactions with third parties because affiliate counterparties have better information about each other and can take action more quickly as needed to make a collateral call or unwind a swap,” the trade groups said.
AmBA
and ABASA also noted that they may ask regulators to reopen the comment period after the Securities and Exchange Commission issues its margin proposal so that they may comment on the entire framework that will govern the margin requirements applicable to uncleared swaps. Read the letter. Read the proposal. For more information, contact
AmBA
's Diana Preston.
July 12, 2011
FDIC Study: Congress Should Not Amend, Repeal Brokered Deposit Reg
The brokered deposit statute continues to serve an essential function and Congress should not amend or repeal it, the FDIC said in a Dodd-Frank Act-mandated study submitted to Congress last Friday.
“During the most recent crisis, the statute has, in large measure, prevented failing banks from increasing their brokered deposits, and, therefore, from taking on greater risk in an effort to grow out of trouble and prevented greater FDIC losses when banks fail,” the study said. “The statute is also an important component of prompt corrective action … requiring regulators and banks to take corrective measures to confront problems.”
The study noted that the banking industry has raised concerns that the statute has not kept up with technological advances, can cause liquidity problems if a bank becomes less than well capitalized, and does not reflect the use of the acquired funds. The FDIC, however, continues to have serious concerns about brokered deposits because research shows that “in general, as brokered deposit levels increase, the probability that a bank will fail also increases,” the study said.
“Conversely, research shows that, generally, banks’ increasing reliance on core deposits reduces the chance of failure and reduces the [Deposit Insurance Fund’s] losses when banks do fail,” the study said . “Consequently, statistical studies support the view that the concepts of core and brokered deposits, as currently defined, remain useful in evaluating and predicting bank performance.” Read the study.
Quick Appointed FDIC’s First Chief Risk Officer
The FDIC appointed Stephen Quick as its first chief risk officer, effective Aug. 15, agency officials said last week. Since 2000, Quick has served as director of the office of evaluation and oversight at the Inter-American Development Bank, a $100 billion multilateral finance institution. “His depth of experience in both the finance and policy fields will benefit the FDIC as it formalizes and expands its corporate-wide risk management program,” outgoing FDIC Chairman Sheila Bair said. Read more.
FDIC Encourages Relief for Arkansas Storm Victims
The FDIC yesterday encouraged banks to work constructively with borrowers in areas of
Arkansas
affected by severe storms, tornadoes and flooding. Extending repayment terms, restructuring existing loans or easing terms for new loans, if done in a manner consistent with sound banking practices, can contribute to the fiscal health of local communities and serve the long-term interests of lending institutions, the FDIC said. Read more.
July 11, 2011
FDIC Issues Final Rule on Retail FX Transactions
The FDIC on Friday issued a final rule -- mandated by the Dodd-Frank Act -- that will impose requirements on banks’ foreign currency transactions with retail customers that are not cleared by an exchange.
The final rule will apply to foreign currency futures, options on futures, and options as these terms are used in the Commodity Exchange Act. It also will apply to transactions that are "functionally or economically similar" to futures and options, such as "rolling spot" trades, the FDIC said, and will cover retail transactions involving individuals with $10 million or less to invest and certain small businesses.
Banks entering into trades the rule covers will be subject to requirements in six areas: disclosure, recordkeeping, capital and margin, reporting, business conduct and documentation. They also will be required, among other things, to submit a detailed business plan, demonstrate board approval of the activity, and obtain written approval from the FDIC to provide such products. The rule's effective date is July 15. Read more. Read the final rule.
Bair Completes Term as FDIC Chairman
Shelia Bair stepped down as FDIC chairman on Friday after a five-year term, and agency Vice Chairman Martin Gruenberg assumed the position of acting chairman. Gruenberg is the Obama administration’s nominee to fill the chairman’s slot. Bair will join the Pew Charitable Trusts in
Washington
,
D.C.
, as a senior adviser on Sept. 7, the FDIC press release said. Read more.
July 8, 2011
Compliance Date for Adverse-Action Notices Rule Is July 21
The final rule the Federal Reserve issued Wednesday that amends certain model notices in Regulation B (Equal Credit Opportunity) related to adverse-action notices becomes legally effective on July 21, not 30 days after its publication in the Federal Register,
AmBA
staff experts said. The rule revises the model notices to incorporate the new Dodd-Frank Act credit-score disclosure requirements.
AmBA
is currently developing a staff analysis on that rule and also the related Fed and Federal Trade Commission joint final rules that implement Dodd-Frank Act provisions requiring creditors to disclose credit scores and related information to consumers in risk-based pricing and adverse action notices if such scores were used in setting the credit terms or taking adverse action. For more information, contact
AmBA
's Nessa Feddis.
Fed Report Details Agreements Between Card Issuers, Colleges
The Federal Reserve released a report that contains payment and account information on more than 1,000 agreements between colleges or affiliated organizations and credit-card issuers. The Fed also updated an online database that includes the full text of each agreement that was in effect during 2010. The Credit Card Act of 2009 requires issuers to submit their agreements and other information annually to the Fed. Read more. Read Read the report. View the online database.
July 7, 2011
FDIC Approves Rule to Claw Back Executive Pay
The FDIC Board issued a final rule that further implements the agency's orderly liquidation authority under the Dodd-Frank Act. The rule, among other things, establishes a comprehensive framework for creditors' order of payment and for the procedures that would be used to file and pursue a claim with the receiver.
Under the rule, the FDIC also could recover pay -- for the two years preceding its appointment as receiver -- from senior executives and directors deemed “substantially responsible” for a systemically important financial institution’s failure. The agency would determine the size of the clawback after evaluating an executive’s role in the shareholders’ overall losses after liquidation. The rule also allows for unlimited recoupment of pay beyond two years if fraud was involved. The rule will go into effect 30 days after publication in the Federal Register.
In related news, the board deferred action on the so-called “living will” proposal -- jointly issued by the FDIC and Federal Reserve -- that would require large, systemically significant bank holding companies and nonbank financial companies to submit annual resolution plans and quarterly credit exposure reports. The FDIC and Fed are expected to finalize that rule by the end of August. Read the OLA final rule.
Fed, FTC Issue Final Rules on Credit-Score Disclosures
The Federal Reserve and the Federal Trade Commission issued joint final rules to implement Dodd-Frank Act provisions requiring creditors to disclose credit scores and related information to consumers in risk-based pricing and adverse action notices if such scores were used in setting the credit terms or taking adverse action.
The Fed and FTC rules amend Regulation V (Fair Credit Reporting) to revise the content requirements for risk-based pricing notices and to add related model forms to reflect the new credit-score disclosure requirements.
The Fed also issued a final rule that amends certain model notices in Regulation B (Equal Credit Opportunity) that combine the adverse-action notice requirements for both Reg B and Reg V. The rule revises the model notices to incorporate the new credit-score disclosure requirements. The Reg V and Reg B rules will go into effect 30 days after their publication in the Federal Register. Read more. Read the joint Reg V rule. Read the Fed’s Reg B rule. For more information, contact
AmBA
's Nessa Feddis.
July 6, 2011
Agencies Issue Guidance on Counterparty Credit Risk Management
The federal banking agencies issued guidance that outlines effective industry practices for counterparty credit risk management. The guidance, aimed at banks with large derivatives portfolios, emphasizes using appropriate reporting metrics and exposure limits systems; doing comprehensive stress testing; and maintaining systems that facilitate the measurement and aggregation of CCR across the organization.
“[T]he financial crisis of 2007-2009 revealed weaknesses in CCR management at many banking organizations, such as shortcomings in the timeliness and accuracy of exposure aggregation capabilities and inadequate measurement of correlation risks,” the guidance says. “The crisis also highlighted deficiencies in the ability of banking organizations to monitor and manage counterparty exposure limits and concentration risks … .”
The guidance addresses those weaknesses by reinforcing sound governance of CCR management practices “through prudent board and senior management oversight, management reporting and risk-management functions,” it says. Read more. Read the guidance.
FDIC Board to Meet Today
The FDIC Board at its meeting this morning will consider a proposed rule on the priorities and claims process under the agency’s orderly liquidation authority. The board also will consider a proposed rule -- jointly issued by the FDIC and Federal Reserve -- that would require large, systemically significant bank holding companies and nonbank financial companies to submit annual resolution plans and quarterly credit exposure reports. Read the meeting agenda. Watch the meeting online.
Rep. Neugebauer Concerned About Treasury Influence on Pre-emption Proposal
Rep. Randy Neugebauer (R-Texas), chairman of the House Financial Services’ Oversight Subcommittee, told Treasury Secretary Timothy Geithner last Friday he is concerned about Treasury’s influence on the Office of the Comptroller of the Currency’s pre-emption rulemaking.
Neugebauer said Treasury’s June 28 comment letter criticizing the OCC’s pre-emption proposal prompted such concern. “We seek assurances that the Treasury has permitted the OCC to act independently in the rulemaking for this and all provisions of the Dodd-Frank Act,” he said in a letter.
Neugebauer, among other things, asked Treasury to release by July 15 all documents, records or communications that Treasury officials or advisers -- including Consumer Financial Protection Bureau staff -- have created that refer to the OCC's pre-emption proposal. Read the letter.
AmBA, ABASA Ask CFTC for Added Relief on Certain DFA Swaps Provisions
AmBA, the AmBA Securities Association and five other trade groups last Friday asked the Commodity Futures Trading Commission to clarify ambiguities raised by the agency’s proposed order to provide temporary relief from certain Dodd-Frank Act swaps-related provisions scheduled to take effect automatically.
The trade groups also asked the CFTC to grant additional relief -- where appropriate -- to enhance legal certainty and to ensure there is an orderly and coordinated implementation process. Read the letter. Read the proposed order. For more information, contact
AmBA
's Diana Preston.
SEC Provides Additional Guidance on Security-Based Swaps Under DFA
In related news, the Securities and Exchange Commission last Friday provided additional guidance to clarify which securities laws will apply to security-based swaps starting July 16 -- the effective date of the Dodd-Frank Act’s Title VII.
SEC officials explained that Dodd-Frank requires security-based swaps on that date to be defined as “securities,” subject to existing federal securities laws. The agency therefore issued an order to clarify that a substantial number of those federal securities requirements will not apply to security-based swaps when the revised definition of “security” goes into effect on July 16.
The SEC also issued an interim final rule providing exemptions from federal securities laws that allow certain security-based swaps to continue to be traded and cleared as they have before Dodd-Frank. That interim relief will be in effect until the SEC adopts rules further defining “security-based swap” and “eligible contract participant,” agency officials said. Read more. Read the order. Read the interim final rule.
July 5, 2011
Obama Nominates Curry as OCC Head
President Obama on Friday said he intends to nominate FDIC Board member Thomas Curry to be Comptroller of the Currency. Curry, a former
Massachusetts
state banking regulator, would succeed Acting Comptroller of the Currency John Walsh. Senate Banking Committee Chairman Tim Johnson (D-S.D.) said he plans to move the Curry nomination “as quickly as possible.”
Obama also said he plans to nominate Mary Miller, current Treasury assistant secretary for financial markets, as undersecretary for domestic affairs. Miller would succeed Jeffrey Goldstein, who last week announced he would leave the post later this month.
In related news, the Senate late Thursday confirmed Timothy Massad as Treasury assistant secretary for financial stability. Massad, who served as acting assistant secretary for financial stability, will oversee the winding down of the Troubled Asset Relief Program. Read the White House announcement on Curry and Miller. INTERCHANGE
Keating: Interchange Battle Far From Over at AmBA
While government price controls are still deeply troubling, AmBA was pleased the Federal Reserve did what it could to ease the debit-card interchange rule’s impact on banks, association President and CEO Frank Keating said Friday in a Washington Perspective column.
Keating noted that the Fed heard enough concern and credible arguments during the six-month campaign
AmBA
, the state bankers associations and bankers waged on the issue that the board almost doubled the 12-cent cap it originally proposed. The Fed also did what it could to try to bolster the small-bank exemption. But much remains uncertain and the battle is far from over, he said.
“We … will be watching closely to determine whether market incentives created by this rule inspire retailers to drive business away from community banks, a move that would cause real harm to [them] and the communities they serve,” Keating wrote. “We will also watch to see whether retailers reward customers with lower prices from their billion-dollar windfall or simply pocket the money.”
He emphasized that how it all plays out is an open question. “Networks have to decide how to implement the rule; the marketplace will then react to it,” Keating said. “
AmBA
will closely monitor the situation and act aggressively to protect your interests … . Your input will be important, so look for our requests for information in the coming weeks and months.” Read the column.
OCC Extends Comment Deadline on Overdraft Guidance
The Office of the Comptroller of the Currency on Friday extended to Aug. 7 the original July 8 comment deadline for its proposed guidance on safe and sound banking practices for deposit-related consumer credit products -- including automated overdraft protection and direct deposit advance programs.
AmBA
and a coalition of other bank trade groups had asked for the extension. Read more. Read AmBA’s staff analysis on the proposed guidance. Read the proposed guidance.
FDIC Board to Meet Wednesday
The FDIC Board at its meeting Wednesday will consider a proposed rule on the priorities and claims process under the agency’s orderly liquidation authority. The board also will consider a proposed rule -- jointly issued by the FDIC and Federal Reserve -- that would require large, systemically significant bank holding companies and nonbank financial companies to submit annual resolution plans and quarterly credit exposure reports. Read the meeting agenda.
July 1, 2011
OCC Issues Guidance on Mortgage Foreclosure Practices
The Office of the Comptroller of the Currency issued guidance on national banks’ oversight and management of mortgage foreclosure practices.
The guidance directs national banks to conduct self-assessments of their foreclosure-management practices by Sept. 30, and correct any weaknesses they identify. “National bank examiners will review the self-assessments and corrective actions in the next quarterly review or examination of the bank,” the OCC said.
The guidance also clarifies supervisory expectations on foreclosure process governance; dual-track processing; affidavit and notarization practices; documentation; legal compliance; and third-party vendor management.
The OCC explained that while earlier reviews of the 14 largest servicers addressed a wide segment of the mortgage-servicing market, the new guidance is aimed at ensuring that all national-bank mortgage servicers adhere to appropriate foreclosure management standards. Read more. Read the guidance.
FDIC Board to Meet
The FDIC Board will consider a proposed rule on the priorities and claims process under the agency’s orderly liquidation authority. The board also will consider a proposed rule -- jointly issued by the FDIC and Federal Reserve -- that would require large, systemically significant bank holding companies and nonbank financial companies to submit annual resolution plans and quarterly credit exposure reports. Read the meeting agenda.
Agencies Update Host-State Loan-to-Deposit Ratios
The federal banking agencies issued updated host-state loan-to-deposit ratios that they will use to determine compliance with Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act. Section 109 prohibits banks from establishing or acquiring branches outside their home states primarily for the purpose of deposit production. Congress enacted Section 109 to ensure that interstate branches would not take deposits from a community without helping to meet its credit needs. Read more. Read the ratios.
June 30, 2011
Appeals Court Denies TCF's Request to Block Interchange Rule
In related news, the 8th U.S. Circuit Court of Appeals upheld U.S. District Court Judge Lawrence Piersol’s April 4 decision to deny TCF National Bank's request for an injunction to block enforcement of the Federal Reserve’s debit-card interchange rule.
The appeals-court judges, among other things, ruled that Wayzata, Minn.-based TCF hadn’t shown that the rule dictates a maximum price for a good or service set below the cost of production -- the heart of its “confiscatory-rate” argument.
“The Durbin amendment only restricts how much certain financial institutions issuing a debit card may charge for processing a transaction; it does not restrict how much those institutions may charge their customers for the privilege of using their debit-card services,” the court said. Read the decision. For more information, contact
AmBA
's Greg Taylor.
AmBA, State Associations Express Concern About Muni Advisers Rule
AmBA and the state bankers associations sent a letter to Securities and Exchange Commission Chairman Mary Schapiro, expressing their deep, continuing concern about her agency’s proposed municipal advisers rule.
They noted that the proposed rule would label as “municipal advisers” banks and many bank employees providing essential, traditional bank services to local municipalities, including day-to-day deposit, cash management, custody, trustee and lending services.
“We believe the proposal goes well beyond what is required either by the statute or the problems that the statute was written to solve,” the associations said. “[I]t [would] subject our member banks to yet one more layer of regulation for the same activities[and] … increase the cost and reduce the availability of financial services for local municipal governments and other municipal operations … .”
The associations reiterated that the rule should state clearly that banks and bankers providing traditional banking products and services are not required to register as municipal advisers. “[B]anks should be granted the same exemption from [such] registration as registered investment advisers are for comparable advisory activities. No supervisory gap would be created by this approach,” they said.
Copies of the letter were sent to all House and Senate members. Read the letter.
FED ISSUES FINAL DEBIT INTERCHANGE RULEAs
AmBA
reported, the Federal Reserve Board has released its final debit card interchange rule. The final rule modifies the Fed’s original proposal by increasing the fee cap from 12 cents per transaction to 21 cents and allowing an additional 5 basis-point charge per transaction to help cover fraud losses. The Fed also issued an interim final rule that allows a fraud-prevention adjustment of 1 cent per transaction, conditioned upon an issuer adopting effective fraud prevention policies and procedures.For an average $40 transaction, the new rate would be 24 cents, including the fraud surcharge, enabling issuers to recover twice as much as would have been allowed under the Fed’s original 12-cent price cap proposal. B
ecause the 5 basis point adjustment for fraud losses will fluctuate with the size of the transaction, the interchange level also will fluctuate.
The Fed also adopted requirements for issuers to include two unaffiliated networks for routing debit transactions – one signature-based, one PIN-based – and included a delay in the effective date on the pricing and routing restrictions, to October 1, 2011.“While price controls remain an anathema to free market principles, the Federal Reserve has taken a significant step in reducing the harm that could have resulted from the proposed rule,” said AmBA President and CEO Frank Keating.“We commend the Board for recognizing that there are a whole range of costs for which banks should receive reimbursement, including fraud losses, network fees, certain fixed costs, and fraud prevention costs. We likewise commend the Board for delaying the effective dates for compliance with this complex rule. It is clear that the Board benefited from the input of bankers, policymakers and other commentators.“The final rule still represents a 45 percent loss in revenue that banks use to provide low-cost accounts to our customers, fight fraud, and maintain our efficient
U.S.
payments system. This remains a real concern to banks everywhere and the consumers and communities they serve.”
AmBA
will release a detailed analysis of the final rule in the coming days. We also will host a conference call with industry experts on July 14 to discuss the rule and the next steps for our industry. The call is free to
AmBA
members, but registration is required.
APPEALS COURT DENIES TCF REQUEST TO BLOCK INTERCHANGE RULE
A
U.S.
circuit court of appeals upheld a district court decision to deny TCF National Bank's request for an injunction to block enforcement of the Federal Reserve’s debit-card interchange rule.
The appeals court ruled that TCF had not shown that the rule dictates a maximum price for a good or service set below the cost of production – the heart of TCF’s “confiscatory-rate” argument.
“The Durbin amendment only restricts how much certain financial institutions issuing a debit card may charge for processing a transaction; it does not restrict how much those institutions may charge their customers for the privilege of using their debit-card services,” the court said.
For more information, contact AmBA Vice President and Senior Counsel Greg Taylor at 202-663-5028 or gtaylor@aba.com.
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