The intervention by House leaders is a defeat for House Financial Services Chairman Jeb Hensarling, who wrote the bill. | AP Photo House Republicans to drop debit rule repeal

House Republican leaders will drop language from a sweeping bank deregulation bill that would have eliminated a cap on debit card swipe fees, handing a major victory to retail lobbyists who spent months trying to kill the provision.

GOP leaders decided to remove the proposal from the nearly 600-page Financial CHOICE Act after confirming Wednesday that it threatened support for the rest of the bill, multiple senior Republican sources familiar with the matter said.


The legislation, which would repeal and replace key parts of the landmark 2010 Dodd-Frank law, is a top priority on the GOP's agenda.

House Financial Services Committee Chairman Jeb Hensarling plans to offer a manager's amendment to remove the provision from the bill, which he wrote, committee spokesman Jeff Emerson said.

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The Texas Republican kept the debit card rule repeal in the legislation despite signs that a number of Republicans were increasingly uneasy with it. House leaders used Wednesday's whip count to confirm that the provision was jeopardizing the bill.

The issue forced lawmakers to choose between the banks, which wanted to repeal the regulation from Dodd-Frank, and retailers, which were fighting to keep it alive. Both sides claimed billions of dollars were at stake, and in the end, the banks lost.

The decision was the culmination of a months-long lobbying battle going back to last year, when the proposal first appeared in an earlier draft of Hensarling's bill. The regulation at issue is known as the Durbin Amendment, after its author, Sen. Dick Durbin (D-Ill.).

Hensarling had signaled that his proposed repeal of the debit fee cap — which was one sentence in the sprawling bill — might not remain in the final version.

As the House took up the legislation this year, he acknowledged the provision was controversial even as he fiercely defended other elements of the bill, in particular a section that would let banks escape financial regulations if they opted to abide by stricter capital requirements.

“I’ve said before that repeal of the Durbin Amendment was the most contentious part of the bill among Republicans," Hensarling said in a statement Wednesday.

"I believe it belongs in the Financial CHOICE Act, but I recognize and respect that many members of Congress feel differently. We won’t let this one provision hinder passage of an important priority bill that will end bank bailouts and help renew healthy economic growth for all Americans.”

The defeat in the House probably spells the end of the fight over debit fees. Senate Republican leaders have shown no appetite for taking up the issue as they craft their own bank deregulation bills.

Austen Jensen, vice president for government affairs for the Retail Industry Leaders Association, said it should "finally put to rest any more efforts to repeal the debit reforms."

“Republicans in both chambers are looking for three things right now: consensus, progress and wins," Compass Point analyst Isaac Boltansky said. “Publicly reopening the Durbin debate wouldn't help toward those goals. They needed to retrench in order to get a bill that will unify the House Republicans and possibly catalyze the conversation once it gets to the Senate."

Bank lobbyists failed to muster the support they needed, but American Bankers Association President and CEO Rob Nichols said the debate was not over.

“We will continue to let members know that a vote to keep the Durbin Amendment on the books is a vote for government price controls and against consumers," he said.