The banking industry breathed a sigh of relief when the implementation of a key provision of the Dodd-Frank financial reform package was delayed.
On Tuesday, Rep. Barney Frank announced plans to revise the "swipe fee" amendment of the Dodd-Frank financial reform law because of statements by the Federal Reserve saying it is delaying the bill's implementation. When the measure was introduced last May, it was considered by analysts to be a rare loss for big banks and card payment networks like Visa and Mastercard.
The Durbin Amendment, introduced by Sen. Richard Durbin (D- Ill.), would reduce controversial "interchange fees" that credit card companies charge retail stores for each individual customer transaction.
Since retail stores that accept credit cards must pay swipe fees by law, banks can charge high swipe fees without consequence, making it a lucrative revenue source for credit card companies and, as HuffPost's Ryan Grim reported last year, a source of frustration for merchants.
"The Federal Reserve's announcement that they cannot meet the deadline on interchange fees confirms my view that this is the only part of the financial reform bill that needs to be amended," Frank said in a statement. "For this reason, I support legislative action to postpone the deadline so that we can revisit it."
In recent months, JPMorgan Chase has led the push for legislators to kill the Durbin Amendment, arguing that regulating swipe fees would drastically cut into revenue and eliminate their ability to continue widely-popular reward programs. Chase bank, for example, has begun telling customers that as a result of Durbin's legislation, the company will no longer be able to offer Disney Dream Reward Dollars.
"We don't want to make the changes," JPMorgan Chase CEO of consumer finance Ryan McInerney said in an article by American Banker. "But we have to make the changes as a result of the economic impact of the law. If the regulations are delayed, we wouldn't make the changes."
Jamie Dimon, the bank's chairman and CEO, also criticized the amendment, saying it "was passed in the middle of the night with no facts, no analysis and Congress had to vote on it, and it had nothing to do with the crisis."
Last week, the Federal Reserve, responsible for implementing the Dodd-Frank financial reform law, announced it could not comply with the April 21 deadline to finalize regulations. How lawmakers will alter the Durbin Amendment remains undecided.
Correction: A previous version of this article incorrectly stated that retail stores are legally required to accept credit cards.