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Today to see interchange prepay plan action
WASHINGTON (6/29/11)--Two issues of great importance to credit unions, the debit interchange fee cap and the corporate credit union stabilization fund prepayment plan, will be taken up later today by the Federal Reserve and the National Credit Union Administration (NCUA), respectively. Proposed Governing Debit Card Interchange Fees, Fraud Prevention Adjustment, Routing and Exclusivity Restrictions, and other related matters are on the agenda for the Fed’s meeting on its debit interchange fee cap proposal, which will take place at 3:30 p.m. ET. A draft Fed proposal set the cap at 12 cents per transaction. Credit unions and other financial institutions have said that such a low fee would not cover debit account-related costs and could force debit card issuers to charge fees to consumers for the popular debit card service. The Credit Union National Association (CUNA) and credit unions have urged the Fed to minimize negative effects on credit unions and their members when it issues its final proposal. Legislation that would have delayed interchange cap implementation to allow greater time to study the issue failed in the Senate earlier this month, falling on a 54 to 45 vote margin. The measure needed 60 votes to pass. The NCUA’s Wednesday meeting will address its plan that would allow credit unions, on a voluntary basis, to prepay their Corporate Stabilization Fund assessment. That meeting will begin at 8:30 a.m. ET. The NCUA proposed the prepayment plan at its May open board meeting and accepted public comment on the proposal until June 20. CUNA has anticipated that, if the plan is approved, the NCUA will likely give credit unions approximately 40 days after that to tell the agency whether or not they will commit any funds to the plan. CUNA has made recommendations to improve the complex prepayment plan, but has said overall it could help reduce credit unions' assessment for 2011 substantially, depending on credit unions' participation, and it would help even out assessments for subsequent years. CUNA has urged the agency to raise the target minimum commitment level from $300 million to $1 billion, to allow payment of some interest on the prepaid funds, and to apply any excess prepayments against this year's assessments on a pro-rata basis. It is expected that credit unions will have 40 days after this week's meeting to notify the agency of intentions to participate. News Now will cover developments at each of these meetings via its NewsNowLiveWire twitter feed.


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