• October 13, 2010

This week Wayzata-based TCF National Bank has made national news by suing the Federal Reserve challenging the Durbin Amendment to the Wall Street Reform and Consumer Financial Protection Act of 2010, also known as the Dodd-Frank Act.  The 54-page complaint, a short treatise on the credit card industry concluding with three counts,  is here.  (TCF CEO Bill Cooper, directly, on the subject via MPR, here.)

The Washington Post reports:

The legislation, which Congress passed this summer as part of the wide-reaching financial overhaul package, directs the Federal Reserve to study the fees that banks receive from retailers each time a shopper uses a debit card to make sure they are ‘reasonable and proportional.’  But in the first legal challenge to the law, TCF National Bank says that the language does not allow the Fed to consider all the costs of providing and maintaining consumer debit cards.  It also argues that the legislation is unfair because it applies only to banks with $10 billion or more in assets.

The complaint pleads three counts, all seeking declaratory judgments:  first, the complaint pleads a deprivation of a “substantive due process right” to “recovery of cost plus a reasonable rate of return.”  Second, the complaint pleads a regulatory taking along the same lines.  Third, TCF pleads that the Durbin amendment constitutes a denial of the U.S. Constitution’s Fifth Amendment right of equal protection because the amendment has a $10 billion threshold (banks with assets of less than $10 billion are not subject to the regulation) (could there be a rational basis for “discrimination on the basis of asset value”?).

As reported by the Washington Post, TCF chief executive Bill Cooper appears to concede this is an “aggressive position.”  WaPo also reports that Doug Kantor, counsel to the Merchants Payments Coalition, a trade group, pronounces that “There is zero legal merit to their suit.”

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