TCF Appeals Denied Request in Debit-Card Fee Suit

The Wayzata-based bank holding company has appealed a lower-court's decision to reject its request to block enforcement of forthcoming rules that will limit debit-card swipe fees.

TCF National Bank earlier this week appealed a lower-court decision that denied its request to block enforcement of upcoming rules that will limit the fees that large banks can collect for debit-card transactions.

On April 4, District Judge Lawrence L. Piersol in Sioux Falls, South Dakota denied Wayzata-based TCF's request for a preliminary injunction to stop the limits from being enforced and allowed the case to move forward while Congress debates the issue. But he also rejected a Federal Reserve request for TCF's suit to be thrown out.

The limits being debated are for fees that merchants pass along to banks in exchange for being able to accept debit-card payments. They constitute the Durbin amendment-a portion of the Wall Street financial reform act, or the Dodd-Frank Act, which was passed by Congress in July 2010.

TCF sued six members of the Federal Reserve's board in October, arguing that the Durbin amendment would cause it to lose significant revenue and is unconstitutional. The interchange fee limits only apply to banks that have $10 billion or more in assets, which puts larger banks at a disadvantage, TCF contends.

TCF has previously indicated that it began distributing Visa debit cards to its checking account customers in 1995. Today, more than 800,000 customers use TCF-branded Visa debit cards each month-and more than 1.5 million customers have the company's Visa debit cards.

Between August 1, 2009 and July 30, 2010, TCF generated interchange revenue of just over $100 million. TCF said that incremental costs directly related to debit cards during that time was just under $52 million-and it would have only recovered $22.7 million in under the new rules proposed by the Federal Reserve.

The Fed hasn't yet settled on a specific interchange fee cap, and Federal Reserve Chairman Ben Bernanke said last month that it will miss its April 21 deadline for issuing the regulations. But in December, the Fed proposed capping debit-card interchange fees at 12 cents per transaction; the current formula averages 1.14 percent of the purchase price, or 44 cents.

With approximately $18.5 billion in total assets, TCF Financial Corporation-which operates subsidiary TCF National Bank-is Minnesota's second-largest bank holding company. It has 442 branches in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana, Arizona, and South Dakota.

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