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CUNA urges senators opposition to interchange amendments
WASHINGTON (5/7/10)--Finance industry representatives on Thursday joined the Credit Union National Association in expressing their “strong opposition to any amendments to S. 3217 that seek to affect interchange rates and the rules established by payment card networks.” Sen. Richard Durbin (D-Ill.) this week filed a pair of amendments. The first of these amendments would permit merchants to set a minimum or maximum transaction amount for payment by card, offer discounts for use of cash, check, debit card or stored-value card and offer discounts to customers to use a competing card network. That amendment is co-sponsored by Sens. Patrick Leahy (D-Vt.) and Mary Landrieu (D-La.). In the letter, which was delivered to members of the Senate on Thursday, CUNA said that this proposal would leave consumers “vulnerable to surprises” when their cards are rejected “because they spent too much or not enough” and when they learn that “their preferred cards will end up costing them more than other forms of payment.” A second amendment offered by Durbin would direct the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions, to assure that they are what the proposed language terms "reasonable and proportional" to the cost incurred in processing the transaction. “Every one of the approaches proposed by merchant lobbyists” would “deliver devastating consequences to community banks and credit unions, the very financial institutions most committed to building communities and serving local consumers,” the letter added. “By striking at the very core of our local economies, these small financial institutions will be squeezed out of the marketplace by a protected class of large retailers bent on reaping more profits.” The proposed changes would also weaken small institutions ability to compete with their larger counterparts, according to the letter. While CUNA opposes any changes to the current rules governing interchange, the letter urged legislators, at a minimum, to “appropriately examine the potentially devastating consequences of any amendments of this nature before taking action that would harm our nation’s small financial institutions, their customers, and our economic recovery.” The Senate has not held a hearing on interchange or its effects on financial or consumer markets. CUNA is also working with state credit union leagues and individual credit unions to oppose interchange through direct discussions with their individual Senators. Co-op financial services, a credit union service organization, has also urged its members to contact their Senators. Legislators have also introduced amendments that would limit the amount that financial institutions could charge for a single ATM transaction to 50 cents. Amendments that remove a proposed $50 billion resolution fund for failed entities and would prevent future taxpayer-funded bailouts of financial firms were also approved on Wednesday. CUNA continues to monitor the amendment process for any additional changes to S. 3217. For the full CUNA letter, use the resource link.


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