June 8, 2011
WASHINGTON, D.C. – Senate Banking Committee Chairman Tim Johnson (D-SD) today gave the following floor statement in support of Senator Jon Tester’s (D-MT) bipartisan amendment requiring further study of the debit interchange market before implementing the rule. Senator Tester’s amendment would require the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration to conduct research and to take into account the adverse effects on consumers, the effectiveness of the exemption for community banks and credit unions, and all costs associated with debit card transactions to card issuers and payment card networks in the debit interchange rulemaking.
Below are Chairman Johnson’s remarks as prepared for delivery:
“Mr. President, I want to express my support for the amendment by Senator Tester.
“Last year when Congress passed the debit interchange fee provision, I opposed the measure.
“I was not convinced that the provision would work for small banks and credit unions, and I was not convinced that the benefits would be passed on to consumers.
“My thinking has not changed.
“Throughout this debate many studies have been cited, but none of those studies looked at the questions we have before us today--will a two-tier system work for small banks, credit unions, retailers and consumers, and what will the impact be on debit card users?
“I remain concerned about the debit interchange provision. As I suspected last year, finding a workable solution is not easily or quickly accomplished.
“As the Fed has worked on this issue and released its rule for public comment, it has become clear that there are many concerns about the rule’s impact on consumers, small banks and credit unions. Chairman Bernanke and other regulators have voiced these concerns several times in recent months at hearings before the Banking Committee, which I chair.
“While there may be a need for debit interchange reform, it should be done right. This amendment by Senator Tester will give the Fed and other agencies more time to study this issue to find a workable solution, especially the small bank exemption that is intended to allow the community banks and credit unions to continue to serve consumers all across America. Let’s be clear, the Tester amendment does not repeal the debit interchange provision, it simply asks for more time to study and get it right.
“Mr. President, I want to thank Senator Tester for his efforts to help produce a bipartisan compromise that works for our community banks and credit unions. Just like in his home state of Montana, the community banks and credit unions are important to my constituents in South Dakota.
“As we saw in the last Congress, Senator Tester is an effective legislator who does a great job building bipartisan consensus, and this latest effort of his is another commonsense proposal that bridges the gap on a complicated financial issue.
“Debit cards are important to consumers and to the retail industry. This is not about picking sides—this is about creating a functioning payment system that works for all stakeholders. And I believe Senator Tester’s amendment will help us accomplish the goal of getting this right. I encourage my colleagues to support Senator Tester's amendment.
“Mr. President, I yield the floor.”