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News Now

CU System
Conn. congressmen urge Fed to consider CUs on interchange
MERIDEN, Conn. (2/23/11)--The Credit Union League of Connecticut has received copies of letters written by U.S. Reps. John B. Larson (D-Conn.) and Chris Murphy (D-Conn.) to the Federal Reserve, requesting that the Fed make sure that Congress's legislative intent is upheld when it considers its debit card interchange fees and routing proposed rule. The letters to Fed Chairman Ben Bernanke were written as a result of meetings and discussions with the league, said the league. In them, the congressmen asked that the Fed make sure it upholds their intent, when the bill was passed last year, to exempt small issuers like credit unions and community banks so they can remain competitive with larger issuers, according to a press release from the league. Larson's letter said that in drafting the Dodd-Frank Wall Street Reform and Consumer Protection Act, "Congress was committed to leveling the playing field for our nation's small merchants, while also establishing a meaningful exemption for small issuers, particularly community banks and credit unions. I strongly urge you to adhere to this intent in drafting the final rule." Murphy's letter noted that in considering the legislation, "Congress was sensitive to small issuers, particularly community banks and credit unions, and worked to address their concerns with a small issuer exemption." Both letters indicated concern from credit union and community banks about the Fed's implementation of the proposed rule. In discussing the two-tiered fee system, Murphy wrote that some debit networks may eventually stop servicing cards issued by small depository institutions. "The restrictive not-for-profit capital structure of credit unions makes this particularly vexing and could force credit unions into discontinuing their debit programs," he said. According to league President/CEO Tony Emerson, members of Congress in Connecticut are "receptive to the needs of credit unions to stay competitive in the marketplace. They understand that credit unions, as not-for-profits, would not be able to sustain debit card programs unless a two-tiered system is in place." The Credit Union National Association (CUNA) also has urged the Fed to take the time to study the new interchange law, rather than forging ahead with new rules, so everyone including consumers, merchants and financial institutions, wins. The Fed should be given time to consider all interchange related costs and set a reasonable interchange rate to avoid unintended consequences such as elimination of debit card programs by credit unions, said CUNA President/CEO Bill Cheney. (See related story, "CUNA, Two-year rule delay needed for interchange study" in News Now's Washington section)


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