Category Archives: Federal Reserve

Senators Seek to Delay Debit Swipe Fee Regulations

A bipartisan group “of senators introduced a bill on Tuesday that would delay a new federal regulation to lower the swipe fees that banks could charge merchants for processing debit card transactions,” the New York Times reports.

Although there is growing uneasiness with the regulation, it is not at all clear the senators will succeed in upending the law, which easily passed the Senate last year and was a cause championed by a leading Democrat.

The latest bill, introduced Tuesday by nine senators led by Senator Jon Tester, a Democrat from Montana, calls for a two-year delay and a one-year study during that period of the effect of the proposed limits on debit fees.

The Dodd-Frank financial regulation bill, which became law last summer, directed the Federal Reserve Bank to determine the limits in April and put them into effect in July.

The proposed rules have faced complaints and heavy lobbying from banks, credit unions and credit card companies, which say that cutting and capping fees mean that the fees will fail to cover the cost of processing the transactions and accounting for fraud.

The Federal Reserve proposed cutting the fees to 12 cents a transaction, down from the current average of 44 cents a transaction.

Processing fees on debit and prepaid cards totaled $20.5 billion last year, according to the Nilson Report, a research firm.

A press release announcing the Debit Interchange Fee Study Act notes that Senators Bob Corker (R-TN), Jon Kyl (R-AZ), Ben Nelson (D-NE), Tom Carper (D-DE), Pat Roberts (R-KS), Chris Coons (D-DE), Mike Lee (R-UT) and Pat Toomey (R-PA) joined Tester in introducing the measure.

According to the New York Times, five of the “senators who co-sponsored Tuesday’s legislation opposed the debit fee limits when Senator Richard J. Durbin of Illinois pushed the original legislation through the Senate last year.”

However, Mr. Durbin’s support, along with the fact that his measure passed on a lopsided 64-33 vote last May, means that the nine senators could face an uphill battle to win enough votes to pass. Only one co-sponsor voted in favor of the amendment, and the other three co-sponsors were not Senate members at the time.

Wonk Room says Senator Ben Nelson is the member who originally supported the Durbin measure.

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Filed under Banks, Credit Cards, Federal Reserve

Banking Committee to Hold Hearing on Peter Diamond Nomination

The Senate Banking Committee “said on Tuesday it would hold a hearing on the nomination of Nobel laureate Peter Diamond to be a member of the Federal Reserve Board on March 8,” Reuters reports.

Diamond’s nomination failed to advance last year after Republican members of the committee questioned his monetary policy qualifications.

The committee approved his nomination twice but his appointment languished as critics used procedural tactics to stall it, and President Barack Obama renominated Diamond this year.

Diamond, who is “known for his work on behavioral economics, has written extensively on pensions and retirement benefits, including the Social Security system.”

He won a Nobel late last year for his research on labor markets.

The top Republican on the Senate Banking Committee, Richard Shelby, has said he does not believe Diamond’s credentials are appropriate for someone who would help steer U.S. monetary policy.

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Filed under Federal Reserve, Hearings, Nominations

Rand Paul Introduces Audit the Fed Bill

Senator Rand Paul (R-KY) introduced legislation today “allowing for a full audit of the Federal Reserve,” according to a press release from his office.

This legislation is a Senate version of similar legislation long-championed by and introduced this session in the House of Representatives by his father, Congressman Ron Paul of Texas. Co-sponsoring the “Federal Reserve Transparency Act of 2011” (S. 202), are Senators Jim DeMint of South Carolina and David Vitter of Louisiana.

The bill will “eliminate the current audit restrictions placed on the Government Accountability Office (GAO) and mandate a complete audit of the Federal Reserve to be completed by a firm deadline.”

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Senate Fails to Act on Peter Diamond, Joseph Smith Nominations

President Barack Obama “will again nominate economist Peter Diamond to the Federal Reserve Board next year, a White House official said on Thursday, setting up a potential clash with Republicans who will have more influence in the new Senate,” Reuters reports.

The Senate scuttled Diamond’s nomination on Wednesday by failing to vote on it before adjourning a lame-duck legislative session for the year.

The Obama administration views Diamond, a Nobel prize-winning economist at the Massachusetts Institute of Technology, as extremely well qualified for the job and believes Republicans will see this too if they stick with him.

Senator Richard Shelby (R-AL), who “will be back when the Senate reconvenes on January 5, had placed a so-called hold against confirmation of Diamond.”

Shelby applied the same tactic to delay confirmation of Obama’s choice to head the regulatory body that oversees Fannie Mae and Freddie Mac, Joseph Smith, the North Carolina commissioner of banks. Smith’s nomination also was killed by Senate inaction.

The only way Obama’s Democrats in the Senate could have gotten around the holds was to muster 60 votes in the 100-member Senate, but they were unable to do so.

White House officials “provided no details on whether they will try to revive Smith’s nomination to head the Federal Housing Finance Agency.”

Senator Shelby is currently the Ranking Member of the Banking, Housing and Urban Affairs Committee.

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Filed under Fannie and Freddie, Federal Reserve, Housing, Nominations

Banking Committee Approves Peter Diamond

CAMBRIDGE, MA - OCTOBER 11:  Massachusetts Institute of Technology professor Peter Diamond prepares to address the media after winning the 2010 Nobel economics prize on October 11, 2010 in Cambridge, Massachusetts. Diamond is one of three winners named on Monday for his work on theories for how unemployment can be affected by economic policies.

A Senate panel “has approved the nomination of Nobel prize winner Peter Diamond to be a member of the Federal Reserve,” the AP reports.

The Senate Banking Committee, in a 16-7 vote, sent the nomination to the full Senate.

The seven senators opposing Diamond’s nomination on Tuesday were all Republicans. They included Sen. Richard Shelby of Alabama, the top-ranking Republican on the panel.

President Barack Obama nominated Diamond to the Fed in late April. But opposition from Senate Republicans had stalled the nomination. They had questioned Diamond’s practical qualifications for the job.

Diamond, an economist at the Massachusetts Institute of Technology, is an authority on Social Security, pensions and taxation. He won the Nobel prize in economics last month.

(credit image – daylife/getty)

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Filed under Committees, Federal Reserve, Nominations