WASHINGTON (4/15/10)--The Credit Union National Association (CUNA) on Wednesday told the Federal Reserve that it is “concerned” by the recent proposal that implements the provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) that require penalty fees to be "reasonable." Under the proposal, financial institutions may base these fees on costs, deterrence value, or they may charge a “safe harbor” fee that would be determined at a later time but before the Aug. 22 effective date. According to a CUNA comment letter, credit unions “will most likely only be able to use the safe harbor approach, since the other two alternatives are overly cumbersome for smaller financial institutions.” CUNA in the letter urged the Fed, which would determine these safe harbor fees, “to select a fee that is at the upper range of fees charged by credit unions, since credit union fees are reasonable and have always compared favorable to banks and thrifts” and “to allow credit unions and others to comment on these specific safe harbor fees before they are finalized.” CUNA also expressed concern regarding provisions that would prohibit the imposition of multiple penalty fees based on a single event or transaction in some situations. The proposal also addresses provisions of the CARD Act that require biannual reviews of any account rate increases, and in the letter CUNA requests that these “be limited to the first two years after the initial increase.” CUNA has also asked the Fed to provide additional guidance detailing “what would be considered ‘reasonable’ policies and procedures that credit unions need to develop with regard to this review process.” Credit unions should also be given a 45-day cushion to implement any rate decrease that relates to the results of this review process, according to CUNA. As proposed, the rate must be reduced within thirty days of the review. For the full comment letter, use the resource link.