The Federal Reserve wants its rule limiting debit card transaction fees to remain in place while it appeals a judge’s decision rejecting the central bank’s “swipe fee” cap, a top Fed lawyer said Wednesday.
The 2010 Dodd-Frank law called for the Fed to limit the fees that banks charge merchants when customers use debit cards. Judge Richard Leon of the U.S. District Court for the District of Columbia ruled in late July that the Fed’s fee cap of 21 cents per transaction was higher than Congress intended.
Last week, Leon ordered the Fed to determine whether it could write an interim rule lowering the cap, which would take effect immediately but could be adjusted later, and to report back to him on how long that would take.
Scott Alvarez, the Fed’s general counsel, told Leon in court Wednesday that the agency would instead ask to keep the current fee cap in place while the Fed appeals the ruling.
Leon said he would “keep an open mind” as he considered whether to keep the current rule in place during the appeal. Alvarez said that if Leon does not stay his ruling, the Fed will ask the appeals court to do so.
The Fed set the cap at 21 cents in 2011. The National Retail Federation and other groups filed a lawsuit to overturn the Fed’s cap.
A fleet of Bethesda-based Lockheed Martin’s F-35 fighters will cost $857 billion over 55 years to operate and support, 22 percent less than previously estimated, according to the head of the Pentagon office developing the plane.
The new estimate reflects the aircraft’s performance in 5,000 test flights over 7,000 hours, Air Force Lt. Gen. Christopher Bogdan, the Defense Department’s program manager for the F-35, told the Senate Armed Services Committee in written answers last month that had not been made public until now.
“The previous cost estimate did not factor in this new knowledge,” Bogdan said.
Operating costs include expenses such as spare parts, repairs and fuel. Officially, the Pentagon’s estimate remains $1.1 trillion, a two-year-old projection developed by the Pentagon’s independent cost-assessment office.
The F-35 is the Pentagon’s costliest weapons system, with an estimated price tag of $391.2 billion for a fleet of 2,443 aircraft, up 68 percent from the projection in 2001, as measured in current dollars.
The rising costs and troubles in building the plane even as it is being developed have led to criticism in Congress. This year, lawmakers, the Government Accountability Office and the Pentagon test office have said the aircraft is making progress in flight tests and in stabilizing production.
— Bloomberg News
l Federal authorities arrested at least 68 people and were seeking seven more Wednesday in a multimillion-dollar Social Security fraud case in the U.S. territory of Puerto Rico, which they say has one of the highest rates of fraud involving federal disability benefits. Those charged include three doctors and 71 Social Security claimants accused of receiving more than $2 million in disability benefit payments.
l Target on Wednesday warned of weak annual sales and profits as U.S. shoppers remain cautious and as its new Canadian stores are not doing as well as anticipated. The chain posted a second-quarter profit of $611 million, just ahead of expectations, while sales of $17.12 billion missed estimates. In May, Target, noting that shoppers were sticking to shopping lists, trimmed its fiscal-year forecast for adjusted earnings per share to a range of $4.70 to $4.90, from $4.85 to $5.05. It now expects a profit near the low end of that range. Target shares fell 3.6 percent to $65.50.
l Hewlett-Packard made a profit in the latest quarter, reversing a huge loss a year ago that stemmed from an $8 billion charge. But the technology bellwether’s revenue declined 8 percent to $27.2 billion amid weakness in the personal-computer market that shows no signs of easing. HP said Wednesday that it earned $1.39 billion in the third quarter, which ended July 31. That is up from a loss of $8.86 billion a year ago when the results included a charge to reflect the shrinking value of Electronic Data Systems, a technology consulting service HP bought for $13 billion in 2008.
l United Parcel Service plans to drop health insurance coverage for about 15,000 working spouses of white-collar employees to curtail rising costs. Many spouses in the work force will have access to employer-provided insurance under President Obama’s health-care law, and UPS will remove them from its coverage, according to a copy of a memo to employees that was published online by Kaiser Health News. Andy McGowan, a UPS spokesman, did not immediately have a comment on the memo.
l Wells Fargo, the largest mortgage lender in the United States, will cut 2,300 jobs in its home loan business because fewer customers are refinancing as interest rates rise, according to an internal memo reviewed by Reuters. The cuts would represent around 3.3 percent of the bank’s consumer lending employees, the bank said.
— From news services
l 8:30 a.m.: Weekly jobless claims released.
l 10 a.m.: Weekly mortgage rates and leading indicators for July released.
l Earnings: Sears Holdings, Gap.