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Judge Leon’s Lawless Durbin Amendment Debit Card Decision


Since Judge Richard Leon issued his shocking decision on July 31 that called for even more draconian price controls under Dodd-Frank’s Durbin Amendment, some legal commentators have given the judge the benefit of the doubt. They concede the Durbin Amendment is bad law, but they say Judge Leon was correct in his interpretation of the amendment, which basically mandates the Federal Reseve not set price caps on what banks and credit unions charge for interchange fees on debit cards at any rate higher than retailers would like to pay them.

These commentators, some of whom I respect a great deal, simply overlook the incredible sloppiness in Leon’s ruling in NACS. v. Board of Governors of the Federal Reserve. Leon’s decision is filled with unprofessional snark, misconstrues economic terms in the statute’s language and limits its research of “legislative intent” to the “intent” of one member of Congress who voted for the legislation: Sen. Richard Durbin, D-Ill. Leon’s ruling forces the Fed to construe the law in a way that almost certainly will foment a constitutional challenge – similar to the lawsuit TCF Bank filed after the Fed’s more stringent “proposed rule” in late 2010 – involving the 5th Amendment property right to seek a return on capital invested.

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