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Wal-Mart enters interchange litigation fee fray

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WASHINGTON (3/31/14)--Wal-Mart, the nation's largest retailer, took legal action last week alleging Visa and the nation's largest banks have conspired to fix interchange fees and inflate network fees charged to retailers.

Wal-Mart in its 39-page complaint said it filed suit "to recover damages for anticompetitive conduct" by Visa. The suit, Wal-Mart Stores Inc. v. Visa USA Inc., was filed in the U.S. District Court for the Western District of Arkansas.

The suit is similar to one filed in 2008, in which a coalition of merchants alleged MasterCard and Visa set artificially high credit card interchange fees. Wal-Mart declined to take part in that suit, which resulted in a $5.7 billion settlement being awarded to the merchants by U.S. District Judge John Gleeson in the Eastern District of New York, Brooklyn. That settlement has been appealed by the National Retail Federation.

"Many retailers withdrew from the years-long antitrust litigation in New York because they did not like the settlement. Presumably they think they can get a better deal by litigating on their own," Credit Union National Association General Counsel Eric Richard said.

Committee vote scheduled for Senate housing finance bill

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WASHINGTON (3/31/14)--On April 29 at 10 a.m. (ET) the Senate Banking Committee will markup its housing finance reform legislation, according to an announcement by the committee chairman, Sen. Tim Johnson (D-S.D.), and its ranking Republican member, Sen. Mike Crapo (R-Idaho).

It was just earlier this month that the senators unveiled theirhousing finance reform proposal--hailing its bipartisan backing.

The new bill used the Corker-Warner bill (S.1217) as its framework andit is intended to:
  • Protect taxpayers from bearing the cost of housing downturns;
  • Promote stable, liquid, and efficient mortgage markets for single-family and multifamily housing;
  • Ensure that affordable, 30-year, fixed-rate, prepayable mortgages continue to be available, and that affordability remains an important consideration;
  • Provide equal access for lenders of all sizes to the secondary market; and,
  • Facilitate broad availability of mortgage credit for eligible borrowers in all areas and for single family and multifamily housing types.
The Johnson-Crapo draft bill is a lengthy, 425 pages of reforms.

When the bill was released, the Credit Union National Association confirmed that it contained an important modification from an earlier draft bill. A cap for membership in a mutual securitization company was drastically increased, as recommended by CUNA in testimony last November and in meetings with legislative staff on Capitol Hill.

Housing finance reform bills have also been released by House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Minority Member Maxine Waters (D-Calif.). (See March 28 News Now : Waters enters bill into housing finance reform debate.)

Other CUNA priorities for housing finance reform include maintaining a functioning secondary mortgage market that provides credit unions equitable access and the ability to continue to offer mortgage products with predictable payments, like the 30-year fixed-rate mortgage, and ensuring the transition to a new system is smooth.

Enhanced risk-based calculator added to CUNA advocacy tools

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WASHINGTON (3/31/14)--The recent risk-based capital (RBC) proposal has remained a front-burner issue, and the Credit Union National Association has introduced an improved calculator to help credit unions gauge the impact of the proposed changes.

CUNA has also met with the National Credit Union Administration to discuss the agency's RBC proposal.

The new, improved CUNA Risk-Based Capital Calculator lets credit unions determine how the proposal would impact them over time by evaluating changes to their risk assets and ratio numerator values.

The tool also helps credit unions simulate a variety of risk-weighting options. "In addition the weighting options give a credit union the ability to more realistically assess the impact of future balance sheet growth and earnings assumptions. Best of all, the new calculator automatically load's a credit union's data--eliminating the need to gather and hand-enter information," CUNA Vice President of Economics and Statistics Mike Schenk explains.

CUNA's meetings with the NCUA have featured an intensive, ongoing dialogue on credit union concerns regarding the proposal--including a need for broad changes and areas in which the proposal does not conform to Federal Credit Union Act prompt corrective action requirements.

"We are feeling some initial encouragement that the agency is open to changes in the proposal," CUNA President/CEO Bill Cheney wrote in last week's edition of The Cheney Report .

CUNA is also meeting with Capitol Hill staff on the proposal, focusing the discussion on how the RBC  issue could be highlighted during upcoming House Financial Services Committee hearings.

Overall, CUNA has warned that the RBC plan, as proposed, could affect the core operations of most, if not all, credit unions with assets over $50 million. If the RBC proposal is not withdrawn, changes must be made, CUNA has emphasized.

A free, hour-long webinar on the proposal is available on CUNA's homepage.

For this week's The Cheney Report , and more on the RBC proposal, use the resource links.