SIOUX FALLS, S.D. - A South Dakota courtroom is mirroring the debate going on in Congress over debit card fees, Bloomberg reports. TCF Financial Corp. filed a lawsuit against the Federal Reserve that alleged the new fees would make them lose money on debit card services.

Yesterday, U.S. District Judge Lawrence L. Piersol heard arguments about the Fed??s swipe fee regulations. "The purpose of sound regulation is to introduce or advance competition, not to destroy it," said lawyers for TCF in a court filing. The new rules might mean a decline of between $75 and $90 million in debit-card fee revenue, said TCF Financial Vice Chairman Gregory Pulles. The suit claims small banks will be advantaged over big banks under the proposed rules and TCF admitted in its papers that it would still be profitable if the rule went into effect.

Lawyers for Federal Reserve Chairman Ben Bernanke want the judge to rule the suit ahs no merit because Congress has the authority to regulate banks. The bank "merely has a unilateral expectation of receipt of" these fees, wrote the Department of Justice in court filings.

U.S. transactions for debit-cards jumped from around 8 billion in 2000 to 38 billion in 2009, said Bernanke in a letter to a congressional committee. The debit cards have passed credit cards and checks as the most frequently used noncash payment. Currently, Congress is debating whether or not to stop the Fed??s rulemaking on debit card fees. The swipe fee cap is supposed to start July 21, but the Federal Reserve Board of Governors has not yet decided on the cap amount. The Fed will miss its April 21 deadline to set fee standards. In December, the Fed proposed a 12 cent-per-transaction cap on swipe fees.

Update: A U.S. judge in South Dakota rejected a request from TCF National Bank for a temporary injunction blocking implementation of Durbin. Read more here.