NEA Asks Congress to Delay Debit Interchange Rules; Urges Impact Study

Bureau of National Affairs

The National Education Association, representing 3.2 million U.S. educators, has urged Congress to step back and take a careful look at potential adverse impacts of new debit card interchange rules mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In a March 21 letter to lawmakers, NEA backed bipartisan legislation introduced in the Senate and House that would suspend action on a Federal Reserve proposed rule capping debit interchange fees at 12 cents per transaction (51 DER EE-11, 3/16/11).

The Senate bill (S. 575), introduced by Sen. Jon Tester (D-Mont.) would delay action on the Fed rule by two years. The House bill (H.R. 1081), introduced by Rep. Shelley Moore Capito (R-W.Va.), would delay action by one year. Both would require additional studies by federal bank regulators.

Amendment ‘Well Meaning,' but Problematic.

In its letter, NEA said the debit interchange amendment introduced by Sen. Richard Durbin (D-Ill.) was well intentioned, but nonetheless “could have a significant negative impact on the cost of mainstream banking services to middle and lower-income consumers, including teachers and education support professionals, because of the benefits currently made possible by debit cards.”

The letter said that, while the amendment was a well-meaning attempt to lower merchant costs inherent in accepting debit card transactions, “it is becoming clearer that it may have unintended consumer impacts.” Because of this, NEA said more study was warranted to determine if the price controls would “instead result in consumers paying higher prices for the banking services critical to their financial well being.”

The association urged Congress to support the pending legislation that would allow for careful study of potential unintended consequences resulting from the Durbin amendment and the Federal Reserve rulemaking.

The letter was sent to Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), House Speaker John Boehner (R-Ohio), and House Minority Leader Nancy Pelosi (D-Calif.

The NEA letter noted that several other consumer and non-bank organizations have also expressed concerns about the Durbin Amendment and the Fed rule. Those include the Consumer Federation of America and the NAACP.

The NEA letter was signed by Kim Anderson, director of government relations, and Mary Kusler, manager of federal advocacy.

The NEA letter is viewable at