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News Now

Washington
CUNA witness slated for interchange hearing
WASHINGTON (2/14/11)—Frank Michael, President/CEO of Stockton, Calif.-based Allied CU, will testify on behalf of the Credit Union National Association and his credit union during a Feb. 17 hearing on the economic impact of interchange fees. The hearing will take place before the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee, which is chaired by Rep. Shelley Moore Capito (R-W. Va.). Michael has testified before the Senate in recent years, and is also a member of CUNA's Corporate Credit Union Next Steps Working Group. Federal Reserve Governor Sarah Raskin and representatives from various financial institutions are set to speak before the subcommittee. Representatives from a small business and from nationwide corner store chain 7-11 will also testify. The Fed's interchange plan, which seeks to implement provisions enacted by the Dodd-Frank financial regulatory reform package, offers a dual framework for determining what the law calls "reasonable" interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. An alternative framework would simply cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. The Fed is accepting comment on the interchange provisions until Feb. 22, but does not expect the changes to be implemented until after April. CUNA has called for a delay in implementation. Such a delay would give the Fed and legislators more time to consider all interchange related costs, and set a reasonable interchange rate to avoid "unintended consequences" such as the elimination of debit card programs by credit unions. CUNA and its Electronic Payments Coalition partners have sponsored a 30-second television ad to spread the word about potential interchange changes. (See related story: Interchange ads launches by CUNA and partners) House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and fellow Reps. Jeb Hensarling (R-Texas), Barney Frank (D-Mass.) and Gary Peters (D-Mich.) have all commented on the potential impact that interchange changes could have on consumers and financial institutions alike. Finance committees in both the House and Senate have stated that review of interchange fee changes would be a priority in the 112th Congress.


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