Resisting a full-court press from bank industry lobbyists, Senators Chuck Grassley and Tom Harkin voted yesterday against delaying new regulations of fees banks can charge for debit card retail transactions. Under the Dodd-Frank financial reform law enacted last year, the Federal Reserve Board has until July 21 “to ensure fees banks charge merchants for debit card purchases are ‘reasonable and proportional.'” Those fees currently average 44 cents per transaction, totaling approximately $1.3 billion per month nationwide. A proposed Fed rule would cap the fees at 12 cents per transaction.

Democratic Senator Jon Tester of Montana and Republican Senator Bob Corker of Tennessee have been trying to water down the regulation:

Tester and Corker had originally proposed a 24-month delay, then shortened it to 15 months and on Tuesday filed an amendment to reduce it to 12 months in a bid to pick up support.

The Tester-Corker measure would require bank regulators to study the impact of the Durbin regulation on consumers and community banks and credit unions for six months. It requires regulators to issue a rule implementing new swipe fee rates six months later but gives them power to include a wider range of costs which could let banks charge more than the Fed is currently proposing.

The number two Senate Democrat, Dick Durbin of Illinois, sponsored the Dodd-Frank amendment on debit card swipe fees. Speaking on the Senate floor yesterday, Durbin said “leading up to this vote has been one of the most heated debates and exchanges that many of us in the Senate have seen in our time.” The Hill’s Alexander Bolton called it ” the biggest K Street battle of 2011.”

Tester and Corker fell six votes short of the 60 needed to approve their amendment to the financial reform law. In an unusual split, 19 Democrats and 35 Republicans voted to delay the debit card fee rules. Grassley and Harkin were among the 12 Republicans, 32 Democrats and one independent who voted against the amendment (roll call).

Both of Iowa’s U.S. senators both voted for Durbin’s amendment on debit card fees last May (roll call). Kudos to them for resisting the pressure to delay this reasonable regulation. Bolton noted that nine Senate Democrats who supported the original debit card rule also voted for the Tester-Corker amendment.

For what it’s worth, credit cards still offer consumers more protection than debit cards for certain retail transactions.