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Association warns of interchange impact on teachers
WASHINGTON (3/23/11)—Teachers and education support professionals could be hurt by the Federal Reserve's proposed interchange fee cap, according to a national association that represents the country's educators. The National Educators Association (NEA) said in a letter to key senator that the Fed rule “could have a significant negative impact on the cost of mainstream banking services" to many middle and lower-income consumers, including the group's constituents. The letter was sent to Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.). The Fed's proposal would cap debit card interchange fees that are paid by merchants to large debit card issuers at no more than twelve cents per transaction. Issuers with under $10 billion in assets are entitled to be exempted from the interchange fee rate setting provisions, but there is great concern that this proposed exemption would not work as planned. “Further study is warranted to determine if the proposed federal controls on interchange fees for debit swipes as currently mandated by the amendment will meaningfully benefit merchants and their customers, or if such controls will instead result in consumers paying higher prices for the banking services critical to their financial wellbeing,” the letter added. The interchange legislation may also have many unintended consequences, the NEA said. The NEA is a 3.2 million member advocacy organization that represents current and retired teachers, faculty members, and other education support professionals. Other organizations, including the U.S. Hispanic Chamber of Commerce (USHCC), have also called for a delay in the implementation of the new interchange regulation. Legislation that would delay the implementation of the interchange fee cap was introduced in the Senate and House on Tuesday. The two bills would also order regulators to study the impact that the proposed interchange rules would have on credit unions, small issuers, consumers and merchants. The Credit Union National Association (CUNA) supports the legislation. CUNA has encouraged credit unions across the country to contact their federal lawmakers, at home this week for a District Work Period, and ask them to "stop, study and start over” on interchange legislation.
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