MADISON, Wis. (6/14/10)--From Raleigh, N.C., to Superior, Wis., from Houston, Texas, to Kansas City, Mo., and Des Moines, Iowa, credit unions and others are speaking out in the media with this message: No interchange amendment. The amendment in the Senate version of the regulatory reform bill would allow government to intervene in setting interchange fees. It is strongly opposed by Credit Union National Association and credit unions. Last week, hundreds of credit unions have hiked Capitol Hill to deliver their message to Congress. Credit unions and their members have made about 450,000 individual contacts with their representatives. Others took to the media to explain why they oppose the amendment. Here are some examples. In an op-ed in the Kansas City Star Thursday, Stuart E. Weiner, a former vice president and director of payment system research at the Federal Reserve Bank of Kansas City, said credit unions' concerns that they cannot avoid the harms of interchange price controls even through an exemption "should not be ignored." "It is hard to envision an outcome where the larger institutions which are essential to achieve the economies of scale necessary to operate a national or global network choose to continue to support a system that provides a significant revenue advantage to thousands of their competitors throughout the country," he said. "The result would be a single system at the lower regulated rate, in effect bringing the smaller issuers under the regulation," he said. The amendment would require the Federal Reserve, one of the nation's two automated clearinghouse operators, to set prices for its competitors, and it would be difficult for the Fed to precisely determine a correct interchange fee, Weiner said. (For the full article, use the resource link.) In the Houston Chronicle (June 10), business columnist Loren Steffy said, "Financial reform was designed to address the egregious practices of banks that contributed to the financial crisis. Swipe fees weren't part of the problem." James Tuggle, CEO of Transtar FCU, Houston, told the Chronicle that his credit union would have difficulty keeping members or attracting new ones without offering a debit card for checking accounts. Smaller institutions "would be put at a competitive disadvantage. If I want to keep my debit card program, I can either operate it at a loss or pass that on to consumers," which would prompt them to switch to a larger institution. Use the resource link for the full article. In the Superior (Wis.) Telegram, Gary Elliott, president/CEO of Superior Choice CU, said, "We're all in favor of reforms that protect consumers from the kind of bad practices that caused the financial crisis. But this bill should not be used as a convenient cover by merchants simply looking to shift their costs to consumers. Our members should not have to foot the bill." Credit unions aren't asking their members to stand up for a fight that they won't benefit from personally, he said. "Members are standing up for credit unions because they're the owners whose wallets will feel the impact of this provision," he added. "Nothing in the amendment guarantees that consumers--whose interests should drive public policy in the area--will see any savings at all from the reduced interchange fee," said Tom Liebe, vice president of government affairs at the Wisconsin Credit Union League, citing a similar bill in Australia. In Raleigh, N.C.'s News Observer (June 8), Maurice R. Smith, president of Local Government FCU, Raleigh, N.C., wrote, "Credit unions did not cause the financial crisis, but rather have been instrumental in the solution. So we are alarmed that the effects of financial reform could be misplaced and hurt consumers who are already struggling to pay their bills. "With plastic cards, issuers like the credit union run the risk of not getting paid. Fraud is the highest expense and risk for card issuers. Yet the fraud often takes place at the merchant's point of sale," Smith said, adding, "It would seem merchants would like to go back on an arrangement that has served both parties well. Merchants would like to unload all of the risk and their costs on the card issuers. This is not fair." For the article, use the resource link. On Radio Iowa the Iowa Credit Union League explained that the amendment would lead to bigger fees for credit union members. Justin Hupfer, league vice president of government affairs, said the amendment would not include the cost of protecting against fraud, which is a significant cost for debit card programs. The interchange fee would lead to more fees for consumers. And it would be unlikely that merchants would reduce their prices if the interchange fee was lowered. For the full article, use the resource link.