WASHINGTON (6/10/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney said the Senate clearly acknowledged with its 54-45 vote Wednesday that there are issues with the debit card interchange fee cap that need to be examined before a rule goes into effect. “The legislation to delay the interchange provisions of the Dodd-Frank Act required 60 votes to pass the Senate, and it is a sore disappointment that the vote fell short of that. “However, it is important to note that a majority of senators voted with us on the delay--to stop, study, and start over on the fee cap. “We need to use their support as a tool to help improve the interchange implementation rule being drafted by the Federal Reserve Board--to minimize negative effects on credit unions and their members,” Cheney said Thursday in a call to state credit union league presidents. Cheney urged the following actions as the Fed works to meet a July 21 effective date. For senators who supported the delay, Cheney encouraged credit unions to:
* Thank them as soon as possible and urge them to contact the Fed about improvements to the proposed rules. * Tell them it is “absolutely critical” that the Fed take great care in drafting its final rule in a way that goes as far as possible to protect credit unions and other small issuers from the major impact that the new interchange restrictions will have. * Ask them to write to the Fed immediately to ask the agency to use its full authority to protect small debit card issuers and to include all of the appropriate costs when determining a “reasonable and proportional” interchange rate.
For senators who opposed the delay legislation, sponsored by Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.), Cheney said credit unions should: * Contact those senators by email, fax, phone call or letter; * Remind them the interchange statute itself intends to protect credit unions and other small issuers; and * Ask them to speak up on out on behalf of that protection. CUNA has developed a list of 13 specific points senators should be asked to make to the Fed, including asking the agency to require the card networks to report to the Fed that they have developed a two-tiered system that will provide higher fee income for small issuers than the board allows for large issuers. (Use resource link to see remaining points.) Contacts with the Fed should, Cheney advised, be made prior to the agency’s scheduled June 20 meeting. “We anticipate that they might release an interchange cap proposal then with a 30 day comment period.” Cheney added that in their conversations with lawmakers, credit unions must reiterate the impact that will be felt by consumers if card issuers lose the ability to provide free debit card services. Cheney thanked the leagues and credit unions for all their efforts on the interchange issue. He added, “This isn’t over yet; we have more work to do and a chance to make some vital changes. Let’s make the most of the significant impact we have had on this process.”