Senators take swipe at debit card fees

WASHINGTON -- In a move that could resonate at the cash register, the Senate voted last week to limit the fees retailers must pay banks to process debit card transactions.

Senators voted 64-33 for an amendment that allows the Federal Reserve to regulate the interchange fees, usually 1 to 3 percent of a purchase price, that financial firms charge businesses every time a customer's card is swiped.

The legislation lets retailers give discounts to customers who pay with cash. Stores also would be permitted to set thresholds for how much a customer must spend to pay by card.

"To make up for interchange fees, businesses are forced to raise their prices, cut back on expenses or something such as that," said amendment sponsor Sen. Richard Durbin, D-Ill.

"If left alone, it is going to get worse for small businesses that face higher fees, for consumers who face higher prices, and for everyone but the banks and credit card networks," Durbin said.

While retailers cheered, banks lobbied against the amendment, even after Durbin exempted banks and credit unions that hold less than $10 billion in assets.

The financial institutions argued it would hurt banks without helping consumers because any windfall would be kept by retailers.

They also argued customers would be inconvenienced if stores required them to spend certain amounts before they could pay by debit.

Sens. Harry Reid, D-Nev., and John Ensign, R-Nev., voted for the amendment.

The discussion came as the Senate continued debate on a bill to overhaul federal regulation of financial institutions.

Science education bill at impasse

An $85.6 billion science education bill hit an impasse in the House after Republicans won an amendment that would cut it short and freeze its funding.

Also fueling that vote was anti-pornography language that many lawmakers feared would be politically risky to vote against.

Angry at what they considered a gimmick, Democratic leaders withdrew the legislation after the GOP motion prevailed on a 292-126 vote.

The amendment would have frozen spending on most of the bill's programs at 2010 levels and limited it to three years instead of five.

It also called for barring funding for the salaries of federal employees who were found to be accessing porn on their office computers.

According to a recent report on employee misconduct, the National Science Foundation disciplined some workers for inappropriate online activities.

Republicans used a similar strategy earlier this month to water down an energy efficiency bill. In that case, a Republican amendment prohibited energy contractors from hiring convicted child molesters and banned money from the bill to be spent on official travel to casinos.

Rep. Ralph Hall, R-Texas, said the intent of the motion on the science bill was to curtail "excessive spending."

Rep. Bart Gordon, D-Tenn., said the anti-porn provision "means nothing," but effectively would "gut the entire bill. This is an embarrassment, and if you vote for this, you should be embarrassed."

Democrats split on the GOP motion, with 121 voting for it and 125 voting against it. All but one Republican voted for it.

Reps. Dina Titus, D-Nev., and Dean Heller, R-Nev., voted for the Republican motion. Rep. Shelley Berkley, D-Nev., voted against it.

Contact Steve Tetreault at stetreault or 202-783-1760.