BOSTON and TERRE HAUTE, Ind. (6/18/10)--State credit union leagues have expressed their views on the interchange amendment to the U.S. Senate version of the financial regulatory reform bill in various media outlets. Some of the successful league efforts are:
* Daniel Egan, president of the Massachusetts and New Hampshire Credit Union Leagues and the Credit Union Association of Rhode Island, sent a letter to the Boston Globe criticizing the newspaper’s support of the U.S. Senate’s version of the financial reform bill. “Your support of the U.S. Senate’s version of the financial reform bill, which instructs the Federal Reserve to unilaterally cap debit card interchange fees, is a mistake,” Egan wrote. “The 200 banks and 225 credit unions of Massachusetts and millions of consumers will face unintended consequences: higher big-box retailer profits and less convenience and higher costs for consumers. “The merchants who have pushed for this action have sold it as a benefit to the nation’s consumers,” Egan added. “Yet there is no requirement to pass along savings to consumers, nor for the retailers to be responsible for any fraud, liability or negligence of their own doing. The retailers are receiving a big gift, and consumers, local banks and credit unions will suffer the consequences.” * John McKenzie, president of the Indiana Credit Union League, wrote an op-ed piece in the Terre Haute, Ind., Tribune Star in which he maintains there is still time to stop the interchange amendment by contacting Congress. “The current interchange arrangement helps credit unions and community banks cover the financial risks associated with issuing the cards such as losses on unpaid balances, fraud losses and data security,” McKenzie wrote. “These are costs the merchants don’t have to worry about. “The interchange amendment that is now in the financial regulatory reform bill would put in place government price controls on the interchange rates that retail merchants pay,” he continued. “If the government sets the merchants’ interchange rate too low, it will be more expensive for consumers, because credit unions and community banks will be forced to pass along the existing costs of offering debit/credit cards directly to consumers through higher fees.” * Ohio credit union leaders and the Ohio Credit Union League are working with the media to inform the public and policymakers of the detrimental effects of the Senate interchange amendment, the league said (eLumination Newsletter June 17). League Director of Media Relations Patrick Harris conducted an on-camera interview with WBNS-Channel 10 on Wednesday, and had another scheduled with WSYX-Channel 6 for Thursday. A press release from the league resulted in an article regarding Ohio’s efforts to defeat the interchange amendment in the June 2 Dayton Business Journal. A letter to the editor from Steve Favor, CEO of First Ohio CU, Fostoria, appeared in Findlay’s The Courier. League Vice President of Government Affairs John Florian and Harris spoke to a reporter for Crain’s Cleveland Business. A letter to the editor from Jaime Crooks of OhioHealth Care FCU, Dublin, was published in Monday’s Columbus Dispatch.
Individual credit unions also have succeeded in getting the interchange issue discussed in local media. Among them:
* Jim Barbarich, president/CEO of M-C FCU, Danville, Pa., wrote a letter that was published Wednesday in The Daily Item, saying the Senate interchange amendment is harmful to consumers. “This amendment, offered without debate, will harm consumers and our ability to provide critical financial services to our members, other credit union members and community banks in our area,” Barbarich wrote. “The focus of the financial reform bill was to address the bank failures and high-risk activities that led to the worst economic crisis in many of our lifetimes.“The debit card is the new standard of convenience for consumers in this age of automated financial transactions, where fraud protection and data security are in constant focus,” he added. “This service is not free, and is supported in part by interchange revenue, an important part of our revenue stream. The amendment empowers the government with control on the amounts that merchants pay to support the system that allows you to use your card at their establishment. Everyone needs to understand that the credit union assumes all of the risk on a debit card transaction.” * An article in the Marshfield News-Herald Wednesday quotes Pat Wesenberg, president/CEO of Central City CU, Marshfield, Wis., who said smaller institutions just would break even on debit card purchases, and an interchange fee reduction might cause his credit union to raise members’ annual fees on their debit cards. “[The amendment] would change the playing field and certainly make it more favorable to the larger institutions who have larger economies of scale and built-in efficiencies in their organizations because of their size,” Wesenberg said.
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