A coalition of banks and credit card companies has run a TV spot in Washington, D.C., in which a mom unloading groceries says Congress gave retailers a huge gift by allowing the fee to be curtailed. She asks, "I wonder who's left holding the bag."
Firing back in one response, Montana retailers have aired a radio ad aimed at Sen. Jon Tester, D-Mont., a critic of the rules, accusing him of "standing with Wall Street" against the state's small businesses.
The financial system overhaul law that Congress and President Barack Obama enacted last summer ordered the Federal Reserve to curb the so-called interchange fees but left specifics to the central bank. That subjected the Fed to lobbying that included over 8,000 letters and nearly three dozen meetings with industry officials — mostly from banks and credit card companies.
Since the Fed's public comment deadline passed last month, the focus has shifted to Congress, where foes of the plan are expected to soon introduce legislation to delay it.
Unlike most issues in Congress, the dispute has left Democrats and Republicans divided internally since the industry groups each say its own side would help consumers and the other's would hurt them.
"This is why members hate voting on something like this. There's only downside," said Jaret Seiberg, a policy analyst at the financial firm MF Global.
Measured by sheer financial might, bankers have a clear edge.
Commercial banks, credit unions, and Visa and MasterCard — who run the biggest debit card networks — spent a combined $75 million lobbying on all issues in Washington last year, nearly double the retail industry's $40 million, according to the nonpartisan Center for Responsive Politics, which tracks such spending. The American Bankers Association, JPMorgan Chase, CVS Caremark Corp. and Wal-Mart Stores Inc. are among the biggest spenders.
Overall, financial firms outspent the merchants by about the same margin on contributions to candidates during the 2009-2010 congressional campaign, $12 million to $6 million.
Yet the bankers face the steeper climb. Not only are they trying to get Congress to reverse itself, they still bear ill will from their part in the nation's financial crisis and the bailouts that followed.
"To pass something you have to clear quite a few hurdles," said Doug Kantor, an attorney for the Merchants Payments Coalition, representing retailers. "It only takes missing one of those hurdles to derail an effort."
Even should the bankers prevail in the GOP-run House, they'd still have to contend with Sen. Richard Durbin, D-Ill. He got the changes included in the financial overhaul bill on a 64-33 vote and remains a tenacious advocate of the lower fees.
Should a new vote occur, Durbin is sure to use Senate procedures that would let him win with just 41 of the Senate's 100 votes. His job as the Senate's No. 2 Democratic leader means Democratic senators considering reversing their vote from last year would have to think twice.
"We face a challenge in this area, but we continue to push," said Ken Clayton, the American Banking Association's chief counsel.
The bankers have made progress.
Six senators who backed Durbin last year are no longer in Congress. And Sens. Kay Hagan, D-N.C., Michael Bennet, D-Colo., and Mike Crapo, R-Idaho — who all backed Durbin last year — have expressed worries that an exemption the Fed proposed letting smaller banks continue charging higher fees will not work. Members of both parties on the House Financial Services Committee and Senate Banking Committee have also voiced concern.
Fed Chairman Ben Bernanke has given the banks more ammunition. He has told lawmakers that the exemption for smaller banks might not work and said uncertainty over that and other issues — such as whether to include banks' costs for covering debit card fraud in setting the fee — means the Fed might not complete the rule by April 21.
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