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12/6/12

US Banking Industry: Fierce battle over card fees goes on - by im Spencer

After helping negotiate the largest antitrust settlement in U.S. history against credit card companies and banks, Minneapolis lawyer K. Craig Wildfang might reasonably have expected a standing ovation from the retail industry. So far, much of what he's received are Bronx cheers.

Many of the country's biggest retailers, who were not parties to the case, want the $7.25 billion deal dead. Mark Williams, president of financial services at Richfield-based Best Buy, said the settlement "does almost nothing to address why U.S. consumers and merchants continue to pay higher [credit card] costs than nearly every other developed country."

Minneapolis-based Target Corp. believes the settlement has "serious substantive and legal defects" that "perpetuate a broken system" of uncontrolled credit card fees that costs Target hundreds of millions of dollars each year, said spokeswoman Jenna Reck.

Visa and MasterCard accounted for 71 percent of credit card purchasers in 2008, the GAO reported. From 1991 to 2009, MasterCard raised its standard credit card fees by 22 percent, the GAO said. From 1995 to 2009, Visa raised its standard fee by 23 percent.

Experts expect major retailers and trade associations to fight all the way to the U.S. Supreme Court if necessary to kill or materially change the settlement. Opponents say it leaves credit card companies with too few limits on fee increases and prohibits future lawsuits.

Georgetown University law Prof. Adam Levitin, a consumer finance expert, speculated that credit card fees could become a flash point in the U.S. House and Senate, the way debit card fees did in 2011 when Congress voted to restrict them in an amendment to financial regulatory reform.

Read more: Fierce battle over card fees goes on | StarTribune.com

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