Fed looks to keep ‘swipe fee’ cap in place as it appeals judge’s ruling

August 21, 2013
debit card fees
Fed looks to keep cap in place as it appeals

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.

— Reuters

defense
Long-term F-35 costs drop in new estimate

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

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— From news services

Coming Today

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.

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