The Federal Reserve’s mission creep: Picking market winners and losers

Government intervention in markets is back in vogue after Vice President Kamala Harris proposed price controls on groceries and food. But this isn’t the only price control the government is eyeing. The Federal Reserve is picking sides in a fight between banks and big-box retailers concerning who pays what when a customer makes a purchase using a debit card.

The proposed regulation, known as Regulation II, limits the amount that large banks can legally charge merchants to process a debit transaction. It was first enacted in 2011 as required under the Dodd-Frank Act. At the time, retail lobbyists tried to justify this price cap by arguing that lower debit card interchange rates would translate to savings for consumers at the register.