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Dupaco Community CU hosts Sen. Grassley
DUBUQUE, Iowa (7/2/09)--Credit union leaders urged Sen. Charles Grassley (R-Iowa) to preserve current credit card interchange rules and safeguard credit unions’ independent federal regulator at a Dubuque County town hall meeting Tuesday. Iowa credit union representatives asked Grassley not to support proposed federal legislation--H.R. 2695, H.R. 2382 and S. 1212--that would shift the costs of providing credit card transactions, or interchange, from merchants to financial institutions such as credit unions, according to Dupaco Community CU President/CEO Bob Hoefer. “Merchants simply want to pay less for payment card acceptance while still receiving significant benefits,” Hoefer said. “If merchants pay less in interchange fees, this cost would ultimately be shifted to all financial institutions, including Iowa credit unions and, ultimately back to all consumers, including Iowans, who use debit and credit cards.”
Click to view larger image Dupaco Community CU President/CEO Bob Hoefer (left) expresses credit unions’ position on interchange legislation to U.S. Sen. Charles Grassley (R-Iowa) before the start of a public town hall meeting at the credit union.
Click to view larger image More than 125 people attended Sen. Charles Grassley’s town hall meeting Tuesday at Dupaco Community CU’s Asbury branch. (Photos provided by Dupaco Community CU)
Interchange fee rates have remained constant for the past several years and they are a fair rate for merchants using a complex system, added Hoefer. “Despite problems in the financial sector, there has not been one consumer complaint that the payment networks have somehow failed to perform efficiently and effectively, even as consumers go to hundreds of thousands of retailers throughout the world and complete a transaction in seconds,” he said. Through the current system, merchants bear no risk of fraud and interchange rates assist in covering the cost borne by financial institutions. Risks can range from data security breaches to fraudulent transactions, and financial institutions protect against this fraud through interchange rates, he said. Credit union leaders also asked Grassley to maintain the National Credit Union Administration (NCUA) as an independent regulator as Congress looks to overhaul the financial services regulatory system. “There is a huge difference between not-for-profit, cooperative credit unions and for-profit banks,” Hoefer said. “Credit unions largely were not involved in the types of lending practices with which Congress has concerns.” Hoefer underscored that the taxpayer’s cost of operating NCUA is zero. “U.S. credit unions fund the agency through insurance premiums, examination fees, and investment revenue of the National Credit Union Share Insurance Fund,” he said. The credit union charter could be weakened if credit unions were placed under the regulatory authority of a single, consolidated federal bank regulator, Hoefer added. “Such action would only result in increased loan rates, decreased savings rates, higher fees, and the loss of the not-for-profit credit union alternative for Iowa’s 900,000 credit union members,” he said. More than 125 individuals, including 25 credit union representatives from Dupaco Community CU, DuTrac Community CU, and Alliant CU, of Dubuque, attended the event. Julie Vande Hoef, director of government affairs for the Iowa Credit Union League, said Tuesday’s event reflects the strong support of Iowa credit unions in their legislative advocacy efforts. “The future of credit unions depends on their ability to engage lawmakers and articulate the credit union message,” she said. “Elected officials' decisions can influence greatly the future direction of credit unions and their ability to serve members.”


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