To improve the regulatory structure for electronic debit card transactions, and for other purposes.

SA 392. Mr. TESTER (for himself, Mr. Corker, Mrs. Hagan, Mr. Crapo,
Mr. Bennet, Mr. Blunt, Mr. Carper, Mr. Kyl, and Mr. Coons) proposed an
amendment to the bill S. 782, to amend the Public Works and Economic
Development Act of 1965 to reauthorize that Act, and for other
purposes; as follows:

At the appropriate place, insert the following:

TITLE ___--DEBIT INTERCHANGE FEE REFORM

SEC. __1. SHORT TITLE.

This title may be cited as the ``Debit Interchange Fee
Reform Act of 2011''.

SEC. __2. FINDINGS.

Congress finds that--
(1) in response to the proposed debit interchange rule of
the Board of Governors of the Federal Reserve System mandated
by section 1075 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the Chairman of Board, the
Comptroller of the Currency, the Chairperson of the Federal
Deposit Insurance Corporation, and the Chairman of the
National Credit Union Administration Board have publicly
raised concerns about the impact of the proposed rule;
(2) while testifying before the Committee on Banking,
Housing, and Urban Affairs of the Senate on February 17,
2011, the Chairman of the Board stated in response to
questions about the small bank exemption to the interchange
rule, ``there is some risk that the exemption will not be
effective and that the interchange fees available through
smaller institutions will be reduced to the same extent we
would see for larger banks'';
(3) the Acting Comptroller of the Currency, in comments to
the Board, cited safety and soundness concerns and stated,
``We believe the proposal takes an unnecessarily narrow
approach to recovery of costs that would be allowable under
the law and that are recognized and indisputably part of
conducting a debit card business. This has long-term safety
and soundness consequences for banks of all sizes.'';
(4) the Chairperson of the Board of Directors of the
Federal Deposit Insurance Corporation stated in comments to
the Board regarding the proposed rule their concern that the
small bank exemption would not work, stating, ``We are
concerned that these institutions may not actually receive
the benefit of the interchange fee limit exemption explicitly
provided by Congress, resulting in a loss of income for
community banks and ultimately higher banking costs for their
customers.'';
(5) the Chairman of the National Credit Union
Administration Board, in comments to the Board, cited concern
with making sure there are ``meaningful exemptions for
smaller card issuers''; and
(6) all of the comments and concerns raised by the banking
and credit union regulatory agencies cast serious questions
about the practical implementation of section 1075 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act,
and further study and consideration are needed.

SEC. __3. RULEMAKING AND EFFECTIVE DATES.

Section 920 of the Electronic Fund Transfer Act (15 U.S.C.
1693o-2), as added by section 1075 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, is amended--
(1) in subsection (a)(3)(A), by striking ``9 months after
the date of enactment of the Consumer Financial Protection
Act of 2010'' and inserting ``12 months after the date of
enactment of the Debit Interchange Fee Reform Act of 2011'';
(2) in subsection (a)(5)(B)(i), by striking ``9 months
after the date of enactment of the Consumer Financial
Protection Act of 2010'' and inserting ``12 months after the
date of enactment of the Debit Interchange Fee Reform Act of
2011'';
(3) in subsection (a)(8)(C), by striking ``9-month period
beginning on the date of the enactment of the Consumer
Financial Protection Act of 2010'' and inserting ``12-month
period beginning on the date of enactment of the Debit
Interchange Fee Reform Act of 2011'';
(4) in subsection (a)(9), by striking ``at the end of the
12-month period beginning on the date of the enactment of the
Consumer Financial Protection Act of 2010'' and inserting ``a
date determined by the Board'';
(5) in subsection (b)(1)(A), by striking ``1-year period
beginning on the date of the enactment of the Consumer
Financial Protection Act of 2010'' and inserting ``12-month
period beginning on the date of enactment of the Debit
Interchange Fee Reform Act of 2011''; and
(6) in subsection (b)(1)(B), by striking ``1-year period
beginning on the date of the enactment of the Consumer
Financial Protection Act of 2010'' and inserting ``12-month
period beginning on the date of enactment of the Debit
Interchange Fee Reform Act of 2011''.

SEC. __4. STUDY AND REPORT TO CONGRESS.

(a) Study Required.--Not later than 6 months after the date
of enactment of this Act, the study agencies shall jointly
submit a report to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives on the results of a
study regarding the impact of regulating debit interchange
transaction fees and related issues under section 920 of the
Electronic Fund Transfer Act, as added by section 1075 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act.
(b) Subjects for Review.--In conducting the study required
by this section, the study agencies shall examine the state
of the debit interchange payment system, including the impact
of section 920 of the Electronic Fund Transfer Act, as
amended by section 1075 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, and the proposed rule issued by
the Board entitled, ``Debit Card Interchange Fees and
Routing'', on consumers, entities that accept debit cards as
payment, all financial institutions that issue debit cards,
including small issuers, and payment card networks, and shall
specifically address--
(1) all fixed and incremental costs associated with debit
card transactions and program operations to card issuers and
payment card networks, including--
(A) all direct and indirect costs associated with fraud
prevention, detection, and mitigation, including data breach
and identity theft, and the overall costs of fraud incurred
by debit card issuers and merchants; and
(B) financial liability and payment guarantees for debit
card transactions and associated risks and costs incurred by
debit card issuers and merchants;
(2) the overall impact of regulating interchange fees on
consumers, including--
(A) the impact on consumer protection, including anti-
fraud;
(B) the impact on the cost and accessibility of payment
accounts and services; and
(C) the impact on retail prices from changed interchange
rates;
(3) the effectiveness of the exemptions for small issuers,
government-administered payment programs, and reloadable
prepaid cards included in section 920 of the Electronic Fund
Transfer Act, including--
(A) the impact of market forces on such treatment;
(B) in the case of small issuers, the impact on the safety
and soundness of those institutions and their ability to
provide competitive products and services to consumers; and
(C) in the case of government-administered payment
programs, the impact on entities and individuals that utilize
such payment programs and cards; and
(4) the impact of routing and exclusivity provisions in
section 920(b) of the Electronic Fund Transfer Act on all
issuers.

[[Page S3559]]

SEC. __5. REVISIONS TO RULES.

(a) Earlier Rulemaking Suspended.--Any regulation proposed
or prescribed by the Board pursuant to section 920 of the
Electronic Fund Transfer Act during the period beginning on
the date of enactment of the Dodd-Frank Wall Street Reform
and Consumer Protection Act and ending on the date of
completion of the study required under section __04 shall be
suspended by the Board pending the determination required
under subsection (b) of this section.
(b) Determination.--Upon submission to Congress of the
report required by section __04, the study agencies, through
a process coordinated by the Board, shall make a
determination of whether--
(1) either section 920 of the Electronic Fund Transfer Act,
as added by section 1075 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, or the related proposed rule
issued by the Board entitled ``Debit Card Interchange Fees
and Routing'' (75 Fed. Reg. 81722 (Dec. 28, 2010)), does not
consider all fixed and incremental costs associated with
debit card transactions and program operations to card
issuers and payment card networks;
(2) debit card consumers may be adversely affected by
either such section or such proposed rule; or
(3) the exemption for small issuers provided by such
section or as carried out by such proposed rule may not be
effective in practice.
(c) Rulemaking.--
(1) Issuance of new rules.--If at least 2 of the study
agencies, including the Board, make a finding described in
any or all of paragraphs (1), (2), and (3) of subsection (b),
then--
(A) any regulation proposed or prescribed by the Board
pursuant to section 920 of the Electronic Fund Transfer Act
during the period beginning on the date of enactment of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and
ending on the date of completion of the study required under
section __04 shall be withdrawn by the Board and shall have
no legal force or effect; and
(B) not later than 6 months after the date of submission of
the report under section _04, the Board shall issue new rules
in final form under section 920 of the Electronic Fund
Transfer Act, as added by section 1075 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, based on such
findings.
(2) Consideration of costs.--In issuing final rules under
this subsection, the Board shall consider all fixed and
incremental costs associated with debit card transactions and
program operations and allow incentives for a more
innovative, efficient, and secure payment card network,
notwithstanding subparagraph (A) or (B) of section 920(a)(4)
of the Electronic Fund Transfer Act, as added by section 1075
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act.
(d) Small Issuer Review.--
(1) Small issuer exemption review.--Not later than 2 years
after the date of implementation of this Act, and biennially
thereafter, the Board shall examine the debit interchange
market to determine whether the small issuer exemption under
section 920(a)(6) of the Electronic Fund Transfer Act, as
added by section 1075 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, is effective in practice, by
examining factors such as--
(A) changes in interchange rates offered to small issuers
by all payment card networks;
(B) changes in fees paid by small issuers to payment card
networks, including fees for participation in those networks
and other operational and transactional fees;
(C) changes and developments by payment card networks,
merchants, or merchant acquirers and processors designed to
influence the payment method of consumers, including
steering; and
(D) the impact of routing and exclusivity provisions of
section 920(b) of the Electronic Fund Transfers Act on small
issuers.
(2) Report to congress.--Upon completion of the review
described in paragraph (1), the Board shall submit a report
of its findings to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives regarding the
effectiveness of the small issuer exemption in practice,
including recommended legislative or regulatory remedies for
mitigating any harm to small issuers and adequately enforcing
the exemption.

SEC. __6. DEFINITIONS.

For purposes of this title, the following definitions shall
apply:
(1) Board.--The term ``Board'' means the Board of Governors
of the Federal Reserve System.
(2) Small issuer.--The term ``small issuer'' means any
debit card issuer that is a depository institution that,
together with its affiliates, has assets of less than
$10,000,000,000.
(3) Study agencies.--The term ``study agencies'' means the
Board, the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, and the National
Credit Union Administration.
______