The Fed is Ready for Round 2: Federal Reserve Appeals District Court Decision Invalidating Interchange Rules

This blog covered the recent decision by the federal district court in Washington D.C. that called the Federal Reserve’s interchange fee rules “utterly indefensible.” Immediately after the ruling on July 31, 2013, there was a great deal of uncertainty about what action the Federal Reserve would take in response to the court’s ruling, and whether the existing interchange fee rules would remain in effect.

Some of those questions were answered on August 21, 2013. The Federal Reserve filed its notice of appeal. The Federal Reserve is not prepared to accept the district court’s conclusion that the interchange fee rules are “utterly indefensible,” and instead seeks review before the United States Court of Appeals for the D.C. Circuit.

In the meantime, the Federal Reserve is asking the district court to stay its July 31 ruling, which invalidated the rules. Among other things, the Federal Reserve argues that the rules should at least remain in effect during the appeal otherwise there will be no regulations governing interchange fees.

Much to the surprise of the district court, the plaintiffs in this lawsuit, including the National Retail Federation, do not oppose the Federal Reserve’s request for a stay during the appeal. The retailers claim they face a substantial risk of harm if there are no rules in place during the appeal since credit card networks will be free to dramatically increase fees.

This blog will continue to monitor the progress of the case as it works its way through the appellate process.