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Community group asked Fed to withdraw interchange rule

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WASHINGTON (2/28/11)—Adding its voice to growing concern regarding the Federal Reserve Board’s implementation plan for interchange fee provisions contained in the Dodd-Frank Act, the National Community Reinvestment Coalition (NCRC) asked the Fed to withdraw its proposed rule. The NCRC, which represents more than 600 community-based organizations nationwide, was formed in 1990 to “promote access to basic banking services including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America's working families.” In its letter to the Fed, NCRC noted that the economics of interchange fees are “complicated,” and said the group is concerned “with a rule that would inadvertently reduce access to debit cards and other basic banking services to low- and moderate-income borrowers.” “It is therefore imperative to subject this proposal to careful study and analysis. Despite the statutory (July) deadline, we believe that members of Congress would appreciate careful study before implementing this provision of Dodd-Frank,” NCRC said in its public comment letter signed by its president/CEO, John Taylor. The public comment period ended Feb. 22. “We ask you to withdraw or at least stop this rulemaking until such an assessment can be completed. Thank you for consideration of our views,” the letter concluded. The Credit Union National Association urges Congress to “stop, study, and start over” on the interchange law that requires the Fed to set up a framework to limit what card issuers can charge for use of their debit card services. CUNA has warned that unintended consequences of the Fed’s proposed implementation could drive up debit card costs to consumers, or even make it difficult for some consumers to gain the services. CUNA President/CEO Bill Cheney is scheduled to testify at a House hearing Wednesday on the impact of Dodd-Frank on small financial institutions, and the interchange provision is expected to receive more close scrutiny from the legislative panel.