The Senate voted to keep in place a provision of last year's financial reform bill that caps fees on debit card transactions.
The measure to delay the cap was defeated in a 54 to 45 vote.
An amendment attached to the Dodd-Frank legislation compelled the Federal Reserve to limit how much banks can charge merchants when customers use debit cards, and the Fed proposed a 12 cents per transaction limit. The Senate spent the last few days heatedly debating whether to delay that measure, which banks and credit card companies said would cost them billions of dollars annually.
Sen. Jon Tester (D-Mont.) and Sen. Bob Corker (R-TN) sponsored the amendment to delay implementing the provision for six months, during which time regulators would study it. Rep. Barney Frank (D-MA), one of the architects of the sweeping financial reform legislation, called the fee cap a separate issue from his bill and said the House would not oppose suspending it temporarily.
The issue has pitted banks, which currently reap an average of 44 cents per transaction and oppose the measure, against retailers that support it. Both have lobbied heavily for or against the amendment, and banks have blanketed the Washington, D.C. metro with advertisements in favor.
It has also fractured the Democratic caucus, with senators arguing over whom the delay would benefit. Tester sought to cast it as a measure to insulate small banks and credit unions against the loss of revenue, contending that larger banks would be less affected than Main Street banks and credit unions. Conversely, Sen. Dick Durbin (D-IL) called the amendment a banker's compromise for a banker's benefit. Rep. Peter Welch (D-VT) sharpened Durbin's criticism, saying the vote was a gauge of big banks' Capitol Hill clout and ability to sway members of Congress.
This is a very important vote, because - bottom line - this is about whether the big banks will prevail, Welch said.