WASHINGTON (AP) - The Federal Reserve told Congress on Thursday that it may reconsider its proposal to limit the fee that banks charge merchants for debit card transactions to 12 cents per swipe, the latest twist in a battle over billions of dollars.
Fed Governor Sarah Bloom Raskin made the remark at a House hearing at which lawmakers of both parties attacked the Fed's plan and asked her to reconsider, saying it would batter banks still reeling from the 2008 financial crisis.
The financial overhaul bill that President Barack Obama and Congress enacted last summer ordered the Fed to issue rules that would set the fees at a reasonable rate. Currently, merchants typically pay between 1 and 2 percent of the transaction's total and those charges average about 44 cents.
The question of where to set the fees has triggered a lobbying battle pitting merchants and some consumer groups against banks and credit card networks like Visa and Mastercard.
The Fed's proposed 12-cent cap would be a major victory for merchants, who say higher fees are hurting their businesses and their ability to create jobs. Banks say cutting the fees would cause them to lose money and force them to raise their charges for checking accounts and other services.