Bank Challenges Constitutionality of Interchange Regulation

As part of the Dodd-Frank financial reform bill, the Durbin Amendment mandates the Fed to regulate debit card Interchange. TCF National Bank filed a federal lawsuit alleging the Durbin Amendment is unconstitutional in violation of the Due Process Clause of the Fifth Amendment and the Equal Protection Clause of the Fourteenth Amendment.

The Fed is to release a draft of its Interchange rules by January 2011, and issue final rules no later than March 20, 2011. The bank is seeking to stop enforcement of any Interchange rules until the case can be heard. Once the rules are established, others may also initiate lawsuits against the validity of the Amendment.

This litigation may go on for years; with an ultimate decision likely being made in the U.S. Supreme Court. Until then, we may not see debit Interchange rates capped anytime soon.

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