April 25, 2024
Urge Lawmakers to Pause Fed Plan to Slash Debit Card Interchange Fees
MBA is asking bankers to contact their U.S. representatives to urge them to support Congressman Blaine Luetkemeyer’s bill that would require the Federal Reserve to pause its proposal to lower the cap on debit interchange fees and first complete a quantitative study of its effects. Last fall, the Fed proposed revising Regulation II to lower debit interchange fees by almost 30% and instituting a biennial review of the cap without accompanying public comment each time.
Luetkemeyer introduced the Secure Payments Act in March. His bill would require the Fed to measure the effect on consumers of lowering the debit interchange cap. MBA President and CEO Jackson Hataway said the legislation would prevent the Federal Reserve from moving too quickly and taking damaging missteps as it considers further limitations to debit interchange rates.
“The Fed's proposal would have a dramatic impact on the availability of no or low-cost debit and checking products and would disproportionately burden the lowest income consumers,” Hataway said. “It is our hope that Missouri’s congressional delegation and other members of Congress will support Congressman Luetkemeyer and require the Fed to undertake a much more data-driven, comprehensive and thoughtful approach to a proposal that will impact millions of Americans.”
MBA thanks its members for contacting their lawmakers and urging them to support the Secure Payments Act.
MBA, Bank Groups: Congress Must Push For Review Of Regulatory ‘Tsunami’
MBA joined the American Bankers Association and state bankers associations in urging lawmakers to demand an independent review of recent banking agency rulemakings to assess their appropriateness and effectiveness in addressing risks within the banking sector.
In a joint letter to the leaders of the House Financial Services Committee and Senate Banking Committee, the associations said congressional investigations into the causes of last year’s banking crisis remain incomplete, specifically regarding the appropriateness of the regulators’ post-failure actions and rulemakings. The recent push for multiple regulatory changes — including those related to the Basel III endgame, long-term debt requirements and the Federal Deposit Insurance Corporation’s governance proposal — allegedly stem from the failure of Silicon Valley Bank. However, these measures would not have prevented the bank failures, nor would they foster a broad-based, diverse U.S. banking system, they said.
“We believe this regulatory tsunami is not a rational response appropriate to current circumstances and warrants scrutiny,” the associations said.
The associations noted that Sens. Jon Tester, D-Mont., and Thom Tillis, R-N.C., have called for an independent review, as has Federal Reserve Governor Michelle Bowman.
“Regulators should not impose yet another layer of regulation on numerous banks that had nothing to do with the failures and whose condition and management are clearly distinguishable from the banks that failed,” the associations said. “Any regulatory reforms should be evidence-based to safeguard the integrity and stability of our financial system. Regulators as well as banks should be held to high standards of accountability.”
FTC Rule Bans Noncompete Agreements
The Federal Trade Commission voted 3-2 Tuesday to finalize its rule banning noncompete agreements nationally, preempting the laws in all 50 states. The rule is effective 120 days after its publication in the Federal Register.
The proposed rule is both effective going forward and bans enforcement of existing agreements. The FTC allows for “appropriately tailored” nondisclosure and training (recovery of costs) agreements but warns that such agreements cannot be used to evade the ban. The FTC released a fact sheet about the rule, along with updates to its online resources section, which includes a business and small entity compliance guide.
Lawsuits have been filed in federal courts in Texas challenging the ban, including one from the U.S. Chamber of Commerce. MBA General Counsel Keith Thornburg said the complaint brought by the tax consulting firm Ryan LLC is thorough and well-presented.
“The FTC does not have jurisdiction to apply or enforce the ban against banks,” Thornburg said.
However, Thornburg noted it is possible that the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation will apply the rule to banks. MBA staff is researching what position the regulators may take.
Several law firms have written about the ban, including MBA associate members Armstrong Teasdale, Polsinelli, Spencer Fane and Stinson.
DOL Issues Overtime Rule
The U.S. Department of Labor finalized its proposed rule expanding coverage of overtime pay to millions of workers. Effective July 1, the earnings threshold will increase from $35,568 to $43,888. Beginning July 1, 2025, the earnings threshold will increase to $58,656. Starting July 1, 2027, the earnings threshold will be adjusted and increased for inflation every three years.
When similar changes for overtime pay were proposed in 2016, the rule was challenged by 21 states, and the DOL withdrew the proposal. It is likely that business groups and states will again challenge the rule. It also is possible that Congress could intervene, although a consensus would be difficult.
MBA General Counsel Keith Thornburg said the DOL’s overtime rule, along with the Federal Trade Commission’s ban on noncompete agreements, harm both employers and employees.
“Forcing one-size-fits-all business and employment practices destroys the ability for individuals to achieve their personal work-live balances and financial goals,” Thornburg said.