The initial adjustment to the debit card interchange fee cap would be a decrease in the base component from 21 cents to 14.4 cents and a reduction of the ad valorem component from 5 basis points to 4 basis points, alongside a marginal increase in the fraud-prevention adjustment from 1 cent to 1.3 cents. [...] The Proposal’s acknowledgement that it cannot determine the effects on consumers stands in contrast to the Fed’s obligation to “examine the relevant data and articulate a satisfactory explanation for its action, including a ‘rational connection between the facts found and the choice made.’”7 The analysis is incomplete and calls into question the veracity of the claims made in favor of the Proposal. [...] The Fed claims it has the authority to skip the notice and comment process under the “good cause exemption.”8 However, “courts should give no deference to an agency’s assertion of good cause.”9 In fact, the courts should be the sole entities to make that determination and ensure the exemption is “not abused.”10 The Fed has not justified a good cause exemption because the Proposal’s metrics are ill. [...] In 2022, the GAO highlighted several studies that found the enactment of the Durbin Amendment and implementation of Regulation II increased the cost of checking accounts.20 Excluding these costs from the calculation for determining the interchange fee cap is fundamentally flawed and harms consumers—contradicting the Fed’s claim that the Proposal could pass savings down to consumers. [...] This is corroborated by the American Bar Association, which posted an article stating that the implications for the Proposal “will reverberate across the payments and banking industries.”28 The Fed is required to “demonstrate that the consumer protections of the proposed regulations outweigh the compliance costs imposed upon consumers and financial institutions.”29 However, the proposal fails to a.
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