A Federal Reserve proposal to revise Regulation II to cut debit card interchange fees by as much as 30% would be a mistake that will likely hurt small banks, Sen. Jon Tester (D-Mont.) said today during the American Bankers Association’s Washington Summit. Tester, who is a member of the Senate Banking Committee, said what businesses need from regulators is stability, but if regulators are continually changing the playing field as they are with interchange fees, “it makes things really tough.”
“It’s a mistake for a number of reasons, but probably the biggest one from my perspective, as I come from a rural state, is it really hurts the little guys in a big way,” Tester said. “And without those little banks—those community banks—those communities are diminished greatly.”
Tester also said that true-life experience is vital for policymakers to understand the challenges out there “so that when the rules come down the pipe, that they actually accomplish what the goals were.” The senator was critical of what he said was the habit of agencies to pump out regulation after regulation. “I don’t know if it’s because they think that’s job security or what, but it’s not helpful. And so if you can get that real-life experience and combine it with commonsense regulation, that’s really the best of both worlds,” he said.
