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News Now

CU System
Interchange resolution moves through Mich. legislature
LANSING, Mich. (2/15/11)--A resolution in the Michigan state legislature backing a delay in the implementation of the Federal Reserve's proposed interchange regulation was reported out of the Senate Banking and Financial Institutions Committee last week and awaits adoption today by the full Senate. Senate Resolution 14, sponsored by state Sen. Darwin Booher (R-Evert), was unanimously reported out of the committee, said the Michigan Credit Union League (Michigan Monitor Feb. 14). Earlier last week a companion bill, House Resolution 21, was adopted in the full House with bipartisan support after it was reported unanimously out of the House Banking and Financial Services Committee (News Now Feb. 11). "We continue to pull out all the stops on the debit card interchange issue," said league CEO David Adams in the Monitor. In addition to letters written to Michigan's three congressmen on the House Financial Services and to in-district meetings with lawmakers, the league also took "this unprecedented action of asking our state legislature to encourage Congress to address this serious issue." The Credit Union National Association (CUNA) is working with the league to delay implementation of the Fed's interchange provisions. The provisions would cap debit card interchange fees paid by merchants to card issuers at as little as seven cents per transaction. Issuers with less than $10 billion in assets would be exempt from the changes. CUNA President/CEO Bill Cheney recently urged the Fed to take the time to study the new interchange law, rather than forging ahead with new rules, so everyone wins, including consumers, merchants and financial institutions. 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, he said. Credit unions also may be forced to impose new fees on members' debit accounts to keep their card programs afloat, he said. In addition, he challenged retailer claims that any savings gained from the interchange fee cap would be passed on to consumers. The Fed proposal will be open for comment until Feb. 22.


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