The US Court of Appeals for the District of Columbia Circuit [official website] on Friday overturned [text, PDF] a lower court that struck down the Federal Reserve's cap on how much banks are permitted to charge businesses for debit card transactions. The lawsuit was initiated by a coalition of retail groups that argued [AP report] that the cap was too high. The Federal Reserve initially proposed a 12 cent fee per swipe as the cap, but the average fee is now 24 cents per transaction. The retailers argued that Congress gave in to pressure from bank lobbyists when agreeing on the higher fee. In July a federal judge agreed with the retailers and struck down the law [JURIST report], saying that the Federal Reserve lacked the authority to set the fee limit because it improperly included unnecessary data that pushed the fee higher. The DC Circuit disagreed, deciding to defer to the Federal Reserve's interpretation of the law and rejecting the retailers' challenge to the law's reasonableness.
The debit card fee limit was included in the Dodd-Frank Act, which was signed into law [JURIST report] by President Barack Obama in July 2010 and created the new regulatory council to monitor financial institutions in order to prevent companies from becoming "too big to fail." In addition to creating the US Financial Stability Oversight Council (FSOC) [official website], the legislation also gives the Federal Reserve new oversight over the largest financial institutions, creates a bureau of consumer protection, introduces multitudes of new regulations on derivatives and other financial instruments, tasks the Commodity Futures Trading Commission (CFTC) [official website] with regulating the derivatives market and limits the amount of capital banks can invest in hedge funds. JURIST contributor Andrew Cali-Vasquez argues [JURIST op-ed] that position limit regulations may carry unexpected consequences that "could impinge upon the operations of domestic businesses by reducing the availability of financing." JURIST Guest Columnist Louise Bennetts gives a critique of Dodd-Frank [JURIST op-ed], arguing that its framework gives regulators considerably leeway to implement its measures as they see fit.