Yesterday the Senate voted to reject the Tester amendment, which would have delayed the implementation of the Durbin amendment of Dodd Frank, which capped card swipe fees.
In other words: bad news for the banks; caps on swipe fees coming soon.
What’s it all mean, and what comes next?
This is from the bank specialists at Keefe, Bruyette, and Woods:
- There’s no more salvation coming from Congress. The defeat of Tester means that anything else is DOA.
- What’s interesting is that Tester got 54 votes vs. the 33 votes against Durbin last year, which means the sentiment in the Senate on this issue has tilted. But still, it’s DOA.
- The ultimate Fed rule will come in the next few weeks before July 21
- The Fed’s initial rule — a 12 basis point cap — is probably a floor, and given the selloff in financial stocks, ultimately banks will be given more leeway (!).
- Beyond the Fed rule, there’s a lawsuit from TCF Financial Corp*. hoping to block this bill that will wend its way through the court.
*Why is TCF Financial notable? They’ve given a ton of money to Montana Senator Jon Tester, and they’re seen as particularly exposed to this rule.
According to analysis from Bank of America, the company could see a 30% EPS hit!
You can see the big plunge the stock took yesterday after the vote:
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