Financial services to take another swipe

Don’t count them out yet.

Big banks, credit unions and other financial services players lost a crucial vote in the Senate last week to delay new Federal Reserve rules to limit how much they can charge merchants who accept debit cards — a move that would have saved them billions of dollars. But they vow to fight on.

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“We’re not going to walk away with our tail between our legs when a majority of the Senate has spoken loud and clear that they want to slow this thing down. I can’t speak to our next steps at this point. But I can guarantee that when consumers start getting hit with higher fees, thanks to Washington, the Beltway had better brace itself for the react,” said Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which represents banks, credit unions and payment networks such as Visa and MasterCard.

After months of intense lobbying, the financial services industry saw its best hope fade on the Senate floor last Wednesday when an amendment by Sen. Jon Tester (D-Mont.) to delay Fed rules to cap so-called swipe fees died on a 54-45 vote. It needed 60 votes.

Now the financial services industry is assessing the post-Tester world and waiting to see what the Fed’s final rules look like. The draft proposal would cap swipe fees at 12 cents per transaction, down about 70 percent — a cut that would cost the industry an estimated $12 billion a year.

But at this point, insiders say, there’s not much the industry can do except explain to the Fed how the rules will affect them. Or as one banking lobbyist put it, “talk to them, beg and plead, ask for mercy.”

Another financial services lobbyist said he believes the issue has little legislative future because the House is loath to take up a politically volatile issue the Senate has already rejected.

“We’ve done what we could. We tried to get the Congress to intervene, and the Congress has spoken,” the lobbyist said, adding that there’s not much left for the industry to do “except pray.”

After last week’s vote, Sen. Bob Corker (R-Tenn.), who co-authored the amendment with Tester, indicated that the measure is unlikely to be revived soon.

“I got other fish to fry, and we pretty well cooked this one,” he said.

The National Association of Federal Credit Unions, which represents 800 federal credit unions, sent a letter last week to Fed Chairman Ben Bernanke. And on Monday, the association wrote to President Barack Obama, asking him to weigh in, arguing that the Fed’s “proposed rule is a recipe for disaster.”

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