U.S. Representative Barney Frank, the Democrat who co-authored legislation overhauling the financial industry last year, said House Republicans will be “hard-pressed” to change the law substantively.
“The Senate won’t go along and the president won’t go along,” Frank, of Massachusetts, said yesterday on public television’s “Charlie Rose” program. Democrats control the Senate and White House.
House Republicans have worked in recent weeks to chip away at the Dodd-Frank Act, releasing bills to make changes to the law. Republicans have vowed to strike or revise specific provisions, rather than push to repeal the entire law. For those efforts to succeed, Republicans would need broad support within their party and bipartisan backing in the Senate.
The Republicans won’t stay united on changes to the law, primarily because their own members would split on the issues, Frank said.
“The Tea Party is not that crazy about derivatives,” said Frank, the top-ranking Democrat on the Financial Services Committee. “There’s a populist element there and they don’t mind us regulating credit cards.”
Frank reiterated his opposition to a provision in the law to cap debit-card interchange, or “swipe” fees, charged to merchants on each transaction.
The Federal Reserve in December proposed capping the fees at 12 cents, replacing a formula that averages 1.14 percent of the purchase price. The caps, set to take effect July 21, may cost banks including JPMorgan Chase & Co. and Citigroup Inc. as much as $12 billion a year. The proposal set off a lobbying fight on Capitol Hill pitting retail and small-business groups against banks and payment networks including Visa Inc.
‘Major Focal Point’
“There was one thing I didn’t want, and it’s now become the major focal point of controversy, and that’s the debate between the credit-card companies and the retail merchants,” Frank said.
JPMorgan, the second-largest U.S. bank, cited the lost revenue from the proposed cap in deciding to stop offering debit-card rewards for almost all customers in July. The company is mailing letters to consumers announcing the change, said Tom Kelly, a bank spokesman.
Bipartisan groups of House and Senate lawmakers have signed onto legislation to delay the Fed proposal. It’s not clear whether a delay would change the bank’s plans, Kelly said.