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News Now

Washington
Mica Retailers wrong on interchange
WASHINGTON (6/9/10)--Responding to Retail Industry Leaders Association (RILA) claims that most credit unions are exempt from pending interchange changes, Credit Union National Association (CUNA) President/CEO Dan Mica on Tuesday said that the Senate interchange amendment would adversely affect credit unions and urged lawmakers to talk to credit unions, not the RILA, if they want to know the real story. In a message distributed to members of the U.S. Congress, the RILA claimed that 99.96% of all credit unions would be unaffected by Sen. Richard Durbin’s (D-Ill.) interchange amendment in the Senate financial regulatory reform bill. That's not so, Mica countered, noting that CUNA has repeatedly stated that the legislation’s “carve-out” for credit unions with under $10 billion in assets “will not be meaningful because there is no requirement for the payment card networks to operate a higher rate system for small issuers, and there would be no incentive for them to do so.” The interchange language, added to the Senate’s financial regulatory reform bill during the amendment process, would allow government intervention in setting interchange fees. The House version of the reform package is silent on interchange, and CUNA has launched an aggressive push to keep it out of a final bill. Mica added that many observers expect that if the Federal Reserve is given authority to set the debit interchange rate for large issuers, that rate, or a rate quite close to it, will become the debit interchange rate for all issuers, including smaller ones that are not intended to be covered under the rules. “Coupled with the expanded discounting ability of merchants, even if a two-tiered pricing system persisted, interchange rates paid to smaller issuers would come under substantial downward pressure,” Mica added. Credit union representatives from across the country are in Washington this week to urge their lawmakers to remove Durbin’s amendment from the final version of regulatory reform legislation. An additional 270,000 credit union representatives, employees and members have contacted their legislators with the aid of CUNA and credit union leagues. The Arizona Consumers Council also wrote legislators on Tuesday, urging them to remove interchange fee legislation from consideration in order to, at a minimum, study the impact that the legislation would have on the financial services options that are made available to consumers. A group of House and Senate conferees is expected to begin the financial regulatory reform conference process this week.


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