A federal judge established last week a strict schedule requiring the Federal Reserve to revise its debit interchange rule and return to court within a week with the regulator’s ideas on issuing an interim final rule.
The Fed said it has not yet decided whether it will appeal Judge Richard Leon’s ruling on debit interchange, which effectively invalidated most of the rule’s provisions.
Judge Leon criticized the Fed’s counsel for being unprepared to state the regulator’s positions on the potential placement of an interim rule and how long it would take for such a rule to be implemented. Leon stressed that the Fed should proceed expeditiously.
Leon has extended the stay on the interchange rule for an additional week, and a hearing is scheduled for Wednesday at 2 p.m. Briefs on a potential interim rule must be received by Aug. 28, and briefs on the issue of potential damages must be received by Sept. 16.
Seth Waxman, the counsel speaking on behalf of financial institution groups, said damages were not requested by the plaintiffs, institutions that would be required to pay damages are not party to the case and have not had the ability to defend themselves.
Credit Union National Association President and CEO Bill Cheney said the group was “alarmed” by the possibility that any institution could be required to pay out damages for following rules established by a regulatory agency. Cheney said the organization would pursue every legal avenue to keep from paying damages.
Credit unions with assets of less than $10 billion are exempt from the rule and would have a strong basis for which to demand that damage repayments should not apply to the institutions.