The Federal Reserve said on Wednesday that it would appeal a recent decision by a federal judge that concluded the central bank’s caps on debit interchange fees were not consistent with Congress’ intent.
Judge Richard J. Leon of the Federal District Court for the District of Columbia invalidated most portions of the rule late last month, DealBook reports.
The Fed’s decision to appeal the ruling will test the courts’ power to overturn financial rules mandated by Dodd-Frank that are designed to strengthen the financial system and protect against another financial crisis.
Major banks, which profit from interchange fees charged to merchants, expressed support for the Fed’s decision to appeal the ruling. Retailers, however, expressed disappointment in the Fed’s decision.
“We are very disappointed to see the Fed giving in to the banks,” J. Craig Shearman, an official with the National Retail Federation, said, according to DealBook. “The Fed has taken a position that will drag this out while retailers and their customers continue to pay billions of dollars in inflated fees.”
Leon said in his July 31 ruling that the Fed’s interpretation of Dodd-Frank was “irreconcilable with the statute,” adding that the Fed should consider writing an interim rule to be implemented during the appeal process.