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CUNA disappointed by reg reform bills interchange treatment
WASHINGTON (6/28/10)--Credit Union National Association (CUNA) President/CEO Dan Mica on Friday said that he was “disappointed” that House and Senate regulatory reform conferees allowed legislation that would enable government intervention in interchange fee negotiations to remain in the final version of financial regulatory reform. “Although the amendment limiting interchange for credit unions remains in the final bill, credit unions did an extraordinary job in not only expressing the shortcomings of the amendment, but also making changes to it,” Mica added Changes made to the legislation include a requirement that would force the Federal Reserve to account for fraud prevention costs when it determines interchange fees, an exemption for government pre-paid cards, and the removal of a provision that would have allowed merchants to discount between payment card networks. A provision that will force merchants that accept payment from one payment network to accept all debit cards that operate under that network was also added. The House-Senate conference committee staff is expected to release a final report early this week, and the final version of the reform bill should move on to the House and Senate floors this week. "The major upheaval this legislation will cause to the present debit interchange system contravenes the broader reform bill's stated goal of consumer protection," Mica noted. "Millions of consumers will very likely face higher fees as credit unions cope with the lost interchange revenue that has helped underwrite the cost of their card services," he added. CUNA, along with credit unions, will continue urging lawmakers to oppose the final reform bill as long as it contains costly revisions to the current system for processing debit payments. “If the interchange provision does become law, our efforts will turn to the rulemaking process, once it begins with the Federal Reserve, where we intend to fully represent the interests and concerns of credit unions,” Mica said. CUNA also plans to focus its efforts on ensuring that the carveout, which exempts credit unions and other financial institutions with under $10 billion in assets from the interchange restrictions, works under the Fed’s rule. The Fed will also be required to report on the impact that its interchange rules are having on credit unions and other small issuers in its yearly report to Congress. Another victory for credit unions is the inclusion of the National Credit Union Administration chairman on a proposed financial stability oversight council. The broader financial reform bill would also create a new Consumer Financial Protection Bureau within the Federal Reserve. Credit unions with assets under $10 billion would not be examined by the new bureau. Late in negotiations, conferees also agreed to exempt auto dealers from the bureau's purview.


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