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TCF National Bank said it was filing a lawsuit yesterday challenging the constitutionality of the Durbin interchange amendment enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The bank, chartered in South Dakota, said it is one of a small number of banks that would be affected by the measure. The law requires the Federal Reserve Board to review the incremental costs of debit interchange, excluding things such as infrastructure, fraud prevention and similar costs, and to set fees accordingly. It applies only to institutions with $10 billion or more in assets.

The lawsuit names the members of the Federal Reserve Board and seeks a preliminary and permanent injunction against the implementation of the Fed's rulemaking on the Durbin provision. The Fed plans to issue a proposed rule by the end of this year.

NAFCU opposed, and continues to oppose, the Durbin language due to its likely impact on credit unions' card operations.

While credit unions aren't directly targeted by the Durbin measure, NAFCU expects that the fee structure set by the Fed for large banks will be adopted over time for institutions of all sizes by Visa and MasterCard, which set the fees paid by merchants. It is those fees that determine how much card issuers receive on a transaction.

In its lawsuit, TCF Bank takes issue with the legality of capping fees lower than is required to cover related operations and with the manner in which it splits industry by asset size.

"We believe these provisions violate our constitutional rights on three separate grounds: the regulations take our property without just compensation and without due process of law; and they also deny us equal protection under the law," said William Cooper, the bank's chairman and CEO.

The Durbin language "affects only 1 percent of the nation's banks, giving thousands of unaffected banks an unfair competitive advantage,"Cooper said.