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June 6, 2011, 8:00 pm ET - Amendment SA 392 proposed by Senator Tester.
June 7, 2011, 8:00 pm ET - Considered by Senate.
June 8, 2011, 10:04 am ET - On the Amendment S.Amdt. 392 to S. 782 (Economic Development Revitalization Act of 2011)

Full Text of this Amendment

SA 392. Mr. TESTER (for himself, Mr. Corker, Mrs. Hagan, Mr. Crapo, Mr. Bennet, Mr. Blunt, Mr. Carper, Mr. Kyl, and Mr. Coons) proposed an amendment to the bill S. 782, to amend the Public Works and Economic Development Act of 1965 to reauthorize that Act, and for other purposes; as follows:

At the appropriate place, insert the following:
TITLE __X--DEBIT INTERCHANGE FEE REFORM


SEC. __1. SHORT TITLE.
This title may be cited as the "Debit Interchange Fee Reform Act of 2011".
SEC. __2. FINDINGS.
Congress finds that--
(1) in response to the proposed debit interchange rule of the Board of Governors of the Federal Reserve System mandated by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Chairman of Board, the Comptroller of the Currency, the Chairperson of the Federal Deposit Insurance Corporation, and the Chairman of the National Credit Union Administration Board have publicly raised concerns about the impact of the proposed rule;
(2) while testifying before the Committee on Banking, Housing, and Urban Affairs of the Senate on February 17, 2011, the Chairman of the Board stated in response to questions about the small bank exemption to the interchange rule, "there is some risk that the exemption will not be effective and that the interchange fees available through smaller institutions will be reduced to the same extent we would see for larger banks";
(3) the Acting Comptroller of the Currency, in comments to the Board, cited safety and soundness concerns and stated, "We believe the proposal takes an unnecessarily narrow approach to recovery of costs that would be allowable under the law and that are recognized and indisputably part of conducting a debit card business. This has long-term safety and soundness consequences for banks of all sizes.";
(4) the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation stated in comments to the Board regarding the proposed rule their concern that the small bank exemption would not work, stating, "We are concerned that these institutions may not actually receive the benefit of the interchange fee limit exemption explicitly provided by Congress, resulting in a loss of income for community banks and ultimately higher banking costs for their customers.";
(5) the Chairman of the National Credit Union Administration Board, in comments to the Board, cited concern with making sure there are "meaningful exemptions for smaller card issuers"; and
(6) all of the comments and concerns raised by the banking and credit union regulatory agencies cast serious questions about the practical implementation of section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and further study and consideration are needed.
SEC. __3. RULEMAKING AND EFFECTIVE DATES.
Section 920 of the Electronic Fund Transfer Act (15 U.S.C. 1693o-2), as added by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended--
(1) in subsection (a)(3)(A), by striking "9 months after the date of enactment of the Consumer Financial Protection Act of 2010" and inserting "12 months after the date of enactment of the Debit Interchange Fee Reform Act of 2011";
(2) in subsection (a)(5)(B)(i), by striking "9 months after the date of enactment of the Consumer Financial Protection Act of 2010" and inserting "12 months after the date of enactment of the Debit Interchange Fee Reform Act of 2011";
(3) in subsection (a)(8)(C), by striking "9-month period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010" and inserting "12-month period beginning on the date of enactment of the Debit Interchange Fee Reform Act of 2011";
(4) in subsection (a)(9), by striking "at the end of the 12-month period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010" and inserting "a date determined by the Board";
(5) in subsection (b)(1)(A), by striking "1-year period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010" and inserting "12-month period beginning on the date of enactment of the Debit Interchange Fee Reform Act of 2011"; and
(6) in subsection (b)(1)(B), by striking "1-year period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010" and inserting "12-month period beginning on the date of enactment of the Debit Interchange Fee Reform Act of 2011".
SEC. __4. STUDY AND REPORT TO CONGRESS.
(a) Study Required.--Not later than 6 months after the date of enactment of this Act, the study agencies shall jointly submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of a study regarding the impact of regulating debit interchange transaction fees and related issues under section 920 of the Electronic Fund Transfer Act, as added by section 1075 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act.
(b) Subjects for Review.--In conducting the study required by this section, the study agencies shall examine the state of the debit interchange payment system, including the impact of section 920 of the Electronic Fund Transfer Act, as amended by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the proposed rule issued by the Board entitled, "Debit Card Interchange Fees and Routing", on consumers, entities that accept debit cards as payment, all financial
institutions that issue debit cards, including small issuers, and payment card networks, and shall specifically address--
(1) all fixed and incremental costs associated with debit card transactions and program operations to card issuers and payment card networks, including--
(A) all direct and indirect costs associated with fraud prevention, detection, and mitigation, including data breach and identity theft, and the overall costs of fraud incurred by debit card issuers and merchants; and
(B) financial liability and payment guarantees for debit card transactions and associated risks and costs incurred by debit card issuers and merchants;
(2) the overall impact of regulating interchange fees on consumers, including--
(A) the impact on consumer protection, including anti-fraud;
(B) the impact on the cost and accessibility of payment accounts and services; and
(C) the impact on retail prices from changed interchange rates;
(3) the effectiveness of the exemptions for small issuers, government-administered payment programs, and reloadable prepaid cards included in section 920 of the Electronic Fund Transfer Act, including--
(A) the impact of market forces on such treatment;
(B) in the case of small issuers, the impact on the safety and soundness of those institutions and their ability to provide competitive products and services to consumers; and
(C) in the case of government-administered payment programs, the impact on entities and individuals that utilize such payment programs and cards; and
(4) the impact of routing and exclusivity provisions in section 920(b) of the Electronic Fund Transfer Act on all issuers.
SEC. __5. REVISIONS TO RULES.
(a) Earlier Rulemaking Suspended.--Any regulation proposed or prescribed by the Board pursuant to section 920 of the Electronic Fund Transfer Act during the period beginning on the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act and ending on the date of completion of the study required under section __04 shall be suspended by the Board pending the determination required under subsection (b) of this section.

(b) Determination.--Upon submission to Congress of the report required by section __04, the study agencies, through a process coordinated by the Board, shall make a determination of whether--

(1) either section 920 of the Electronic Fund Transfer Act, as added by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the related proposed rule issued by the Board entitled "Debit Card Interchange Fees and Routing" (75 Fed. Reg. 81722 (Dec. 28, 2010)), does not consider all fixed and incremental costs associated with debit card transactions and program operations to card issuers and payment card networks;
(2) debit card consumers may be adversely affected by either such section or such proposed rule; or
(3) the exemption for small issuers provided by such section or as carried out by such proposed rule may not be effective in practice.
(c) Rulemaking.--
(1) ISSUANCE OF NEW RULES.--If at least 2 of the study agencies, including the Board, make a finding described in any or all of paragraphs (1), (2), and (3) of subsection (b), then--
(A) any regulation proposed or prescribed by the Board pursuant to section 920 of the Electronic Fund Transfer Act during the period beginning on the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act and ending on the date of completion of the study required under section __04 shall be withdrawn by the Board and shall have no legal force or effect; and

(B) not later than 6 months after the date of submission of the report under section X04, the Board shall issue new rules in final form under section 920 of the Electronic Fund Transfer Act, as added by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, based on such findings.

(2) CONSIDERATION OF COSTS.--In issuing final rules under this subsection, the Board shall consider all fixed and incremental costs associated with debit card transactions and program operations and allow incentives for a more innovative, efficient, and secure payment card network, notwithstanding subparagraph (A) or (B) of section 920(a)(4) of the Electronic Fund Transfer Act, as added by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
(d) Small Issuer Review.--
(1) SMALL ISSUER EXEMPTION REVIEW.--Not later than 2 years after the date of implementation of this Act, and biennially thereafter, the Board shall examine the debit interchange market to determine whether the small issuer exemption under section 920(a)(6) of the Electronic Fund Transfer Act, as added by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is effective in practice, by examining factors such as--
(A) changes in interchange rates offered to small issuers by all payment card networks;
(B) changes in fees paid by small issuers to payment card networks, including fees for participation in those networks and other operational and transactional fees;
(C) changes and developments by payment card networks, merchants, or merchant acquirers and processors designed to influence the payment method of consumers, including steering; and
(D) the impact of routing and exclusivity provisions of section 920(b) of the Electronic Fund Transfers Act on small issuers.
(2) REPORT TO CONGRESS.--Upon completion of the review described in paragraph (1), the Board shall submit a report of its findings to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives regarding the effectiveness of the small issuer exemption in practice, including recommended legislative or regulatory remedies for mitigating any harm to small issuers and adequately enforcing the exemption.
SEC. __6. DEFINITIONS.
For purposes of this title, the following definitions shall apply:
(1) BOARD.--The term "Board" means the Board of Governors of the Federal Reserve System.
(2) SMALL ISSUER.--The term "small issuer" means any debit card issuer that is a depository institution that, together with its affiliates, has assets of less than $10,000,000,000.
(3) STUDY AGENCIES.--The term "study agencies" means the Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration.


(As printed in the Congressional Record for the Senate on Jun 7, 2011.)