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News Now

Washington
CU interchange hikes cover the Hill
WASHINGTON (6/10/10)—With the financial regulatory reform conference committee set to start this week, hundreds of credit union representatives from across the country combined forces to urge their legislators to remove the Senate's proposed interchange amendment from the bill during the final round of consideration. The interchange provision would allow government intervention in setting interchange fees. Twenty-two representatives from eight Iowa credit unions and the
Click to view larger imageSen. Tom Harkin (D-Iowa), who has been named as a Senate conferee to work out a final financial regulatory reform package, met with 22 credit union representatives from his state to hear their concerns regarding a provision that, if adopted, would allow the government to set interchange fees. Answering the senator's questions, the Iowa credit union delegation explained that a proposed carve out in the provision intended to shield credit unions and community banks from it's impact would not have the power to do so. Also shown is Legislative Assistant Zachary Schechter Steinberg to the senator's left. CUNA Chief Economist Bill Hampel (foreground)also attended the Iowa meeting. (CUNA Photo)
Iowa CU League met with Sen. Tom Harkin, a Democrat from that state. Harkin, named as one of the Senate’s conferees, listened to credit union concerns for almost 30 minutes, as the Iowa delegation explained how the interchange amendment could threaten credit union operations and harm consumers by driving up card costs. Harkin started the session by saying he is a “strong supporter of credit unions” and wondered if there was some "middle ground" that could be achieved on the interchange language. At the conclusion of the meeting, however, Harkin told the credit union officers that some of the information presented was new to him. “You’ve given me things to think about,” he told the Iowa Hike the Hill participants. Iowa Credit Union League President Patrick Jury acknowledged to Harkin that the issues are complicated and encouraged the senator to keep the provision out of the reform package as non-germane, and to consider it during the regular process of hearings where it can be considered "on its own, in the light of day." The interchange legislation did not make its way into the House version of financial regulatory reform, and credit union advocates are leaning on House members to convince their colleagues in the Senate that removing the interchange fee legislation from the final version of the reform bill is the right move. One of the many House members that met with credit union
Click to view larger imageThe Virginia Credit Union League’s Rick Pillow (left), along with other credit union advocates from throughout the Commonwealth, discussed with Rep. Rob Wittman (R-Va.) (pictured right) the challenges that interchange changes would impose on consumers and credit unions and the promise that lifting the member business lending cap could mean for for the country's economic woes.(CUNA Photo)
representatives on Wednesday was Rob Wittman (R-Va.). Wittman, a former community banker, told the assembled group of Virginia credit union representatives that he recognizes that the current carveout, which would exempt financial institutions with under $10 billion in assets from the interchange legislation, would not achieve its stated goal. While many have claimed that that carveout would protect credit unions, the Credit Union National Association and others have repeatedly warned that the carveout would not be meaningful because there is no requirement for the payment card networks to operate a higher rate system for small issuers. One credit union representative also discussed a previously unmentioned consequence of interchange changes, noting that funding to many nonprofit organizations could be reduced, as the credit unions that they work with to manage their finances would no longer have the ability to share interchange-related dividends with them. Member business lending was also discussed during the meeting. Another meeting that took place was between representatives from Illinois credit unions and Rep. Peter Roskam (R-Ill.). In that meeting, the Illinois group stressed the important role that interchange fees play in helping credit unions cover the costs of potential fraud cases and providing surcharge-free ATMs to their members. Carl Sorgatz, CEO of Naperville, Ill.-based Hawthorne CU and the Illinois Credit Union League’s Patricia Huffman also explained that retailers would likely be able to direct their consumers away from credit union cards and toward other preferred forms of payment. Several outlets have reported that Rep. Barney Frank (D-Mass.) and his staff are reviewing the Senate’s financial regulatory reform bill, which could be released today. The full list of Senate conferees has been released, and Rep. Ed Royce (R-Calif.) on Wednesday said that he would be one of the several House members that will take part in the committee's discussions. It is thought that the interchange amendment could be addressed by the conference committee early next week.


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