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CU testifies New interchange big blow to small institutions
WASHINGTON (7/30/10)--Speaking before a House subcommittee on investigations and oversight hearing on the impact of interchange fees on small businesses, Clearview FCU’s vice president of lending Ron Celaschi said that “any reduction in interchange revenue” would deal a “serious blow” to his credit union and its members. Noting that the interchange provisions, which allow the Federal Reserve to intervene in the setting of interchange fees, were added to the recently enacted financial regulatory reform legislation without a full committee review, Celaschi urged Congress to repeal the interchange provisions “before the intended and unintended consequences of interchange regulation are realized.”
Rep. Jason Altmire (D-Pa.) meets Ron Celaschi before the vice president of lending for Clearview FCU, Moon Township, Pa., testifies before a House Small Business subcommittee Thursday on the how interchange fees affect small business. (CUNA photo)
“No appreciation was given to the consequences that the legislation would have on community financial institutions,” he added. Celaschi, who testified on his own behalf, detailed his Moon Township, Penn.-based credit union’s unique experience with interchange fees. While interchange fees provide a steady source of income for many large financial institutions, Celaschi said that his credit union runs it’s debit program “at a loss” because of the value that his members place on the program. Specifically, Celaschi said that while his credit union spends a total of $2.9 million to run its debit card program, it only brought in $1 million in interchange fee income during 2009, resulting in a $1.9 million funding gap. Any further reductions in interchange will force his credit union to impose fees on members to make up the lost revenue, a move that will undeniably harm the members, Celaschi added. Celaschi also took the opportunity to publicly back an increase in the statutory member business lending cap for credit unions to 27.5%, saying that doing such would allow credit unions to “be a part of the solution to the small business credit crisis.” He added that his own credit union, which currently lends an average of $70,000 to the small businesses that it works with, is “committed” to helping the small businesses in its community. The Credit Union National Association has fully analyzed the impact that the interchange provisions would have on credit unions. For that analysis, use the resource link. CUNA is also working with the Fed to ensure that rules that exempt financial institutions with under $10 billion in assets from the terms of the interchange legislation are closely followed.


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