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IAPI IFoxI highlight CU concerns on interchange
MADISON, Wis. (3/14/11)--Credit unions’ efforts to maintain current debit card interchange fees and Credit Union National Association (CUNA) Chief Economist Bill Hampel’s thoughts on why the Federal Reserve shouldn’t cut them were highlighted in separate media reports last week. An Associated Press account of the grassroots lobbying efforts of financial institutions versus merchants referenced the 4,000 attendees of CUNA’s annual Governmental Affairs Conference were in Washington, D.C., earlier this month and how interchange was at the top of their agenda during Capitol Hill visits. AP talked to one “foot soldier” in the battle with merchants over interchange fees--Charles Garlock, president of Rock Valley FCU in Loves Park, Ill.--who said that his credit union would lose roughly one-third of its annual income, about $150,000 to $175,000 annually, if the Federal Reserve’s proposed cuts in interchange fees go through. “The little guys will be hit the worst,” Garlock said during his lobbying visit earlier this month. “I can’t sustain it.” In a separate TV segment and related story about interchange, Fox Business Network also noted last week’s Washington fly-in by roughly 100 retailers urging Congress to roll back interchange rates. Fox turned to CUNA Chief Economist Bill Hampel for the countervailing view. Hampel stressed how the new interchange law and proposed rules from the Federal Reserve would end up hurting consumers. “If financial institutions have to cover all of the costs or virtually all of the costs of debit, they will have to make it up somewhere,” he explained. “And the most likely way to make that up is through increased fees on the consumers who use the debit cards. So that could be things like a monthly fee to have access to a debit card or a per-transaction fee.” Because of new direct charges, many consumers could quit using debit cards, harming retailers themselves, Hampel added. CUNA is concerned that while the law requires the Fed to set a debit card interchange fee that is “reasonable and proportionate,” neither the law nor the Fed plan does not consider all costs associated with providing the service. To read the articles, use the links:
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