In the wake of last week’s U.S. federal appeals court swipe fee ruling that left merchants in the hands of the Federal Reserve Bank's interpretation of the Durbin amendment, Walmart has now filed suit for US$5 billion in damages over price fixing. Walmart has been less than satisfied with the outcomes of the interchange court battles and legislative actions and has elected to go it alone.
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Last week, IBM announced its entrance to the fraud arena with IBM Counter Fraud Management. In a way, IBM isn't new to the booming fraud space. Relatively mature acquisitions such as SPSS have long had fraud-specific configurations and frameworks. And Global Business Services (GBS) has been delivering fraud-mitigation deployments by combining a variety of fraud-related analytics tools such as reporting and case management. What's new is a fraud-specific SKU and product name—that's always the giveaway that IBM's throwing a lot of new resources behind a product—along with an aggressive product scaling and pricing strategy.
First, in the interest of full disclosure, I should make it clear that I’m a fan of stress tests. Stress tests, such as capital adequacy testing and the Dodd-Frank Act Stress Test (DFAST), simply enable Basel governments—like the U.S. Federal Reserve—to treat the banks that they regulate as borrowers whenever a speculative bubble bursts, which now appears to be every 12 years or so. In fact, the stress-test process looks a lot like the due diligence that banks themselves perform on their own borrowers, including pro forma financial analyses based on dire economic projection scenarios.
Commodity Futures Trading Commission (CFTC) commissioner Scott O'Malia's admission that the regulator needs to go back to the drawing board in terms of defining OTC derivatives reporting requirements was no surprise to anyone. The CFTC has been struggling for some time with an inability to crunch the data it has been collecting from swaps market participants over the last year (every so often publicly complaining about the lack of technology it has to carry out its oversight duties). One of the biggest problems with the whole exercise is not related to technology directly, however; it is the fact that the regulator mandated reporting without having a clear idea of what it would do with the data once it had been collected.
On Friday, March 21, a U.S. federal appeals court ruling reversed Washington D.C.’s district court Judge Leon’s ruling and interpretation of the Durbin amendment. This reversal is significant and precedent-setting in many respects. First and foremost, it upholds the Federal Reserve Bank’s interpretation authority and ability to enforce the nation’s banking laws. In other words, the FRB will not be required to succumb to a district court ruling undermining its authority. This decision also keeps debit card interchange rates at their current levels, which is good news for consumers.