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Fed should continue work toward interchange fix CUNA
WASHINGTON (3/16/11)--The Credit Union National Association (CUNA) continues to “push aggressively” for credit union relief regarding debit card interchange fee regulation, urging President Barack Obama and Federal Reserve Chairman Ben Bernanke to help protect small issuers from the impact of the Dodd-Frank interchange amendment – as Congress pledged to do. The Fed's proposal, which was issued for a public comment period that ended December 16, 2010, does not provide any mechanism to enforce the exemption Congress provided to small issuers from the rate setting provisions under the proposed regulation. Also, the proposal would cap debit card interchange fees that are paid by merchants to large debit card issuers at no more than twelve cents per transaction, despite the fact that costs to all issuers to provide debit card programs are much higher. By law, issuers with under $10 billion in assets are entitled to be exempted from the interchange fee rate setting provisions. However, if the exemption is not meaningful, all issuers may effectively be covered under the proposed rate caps, CUNA has said. CUNA President/CEO Bill Cheney in a Tuesday letter to Bernanke noted that the Fed leader and other federal regulators, including the heads of the National Credit Union Administration and the Federal Deposit Insurance Corp., have raised serious concerns about the impact of the proposal on small issuers. “No one has been able to prove that this proposed exemption would actually work as planned,” Cheney added. Allowing the interchange regulations to go forward as planned will force credit unions to “raise fees for accounts and services, or drop product offerings, or both, the CUNA leader said in his letter. “This cannot be sound public policy and cannot be what any policymaker intended. Credit unions want to continue providing attractive choices in the financial marketplace to their consumer and small business members,” Cheney added. The interchange rate setting provisions would become effective on July 21. However, delaying interchange implementation has been proposed to allow regulators and Congress additional time to study the issue. (See related story: Planned Senate delay ‘adequate’ for study: CUNA) CUNA has also urged Bernanke to support the delay. Cheney’s letter to President Obama is similar to the letter to Bernanke; a copy of the same letter is being sent to U.S. Treasury Secretary Tim Geithner and Consumer Financial Protection Bureau architect Elizabeth Warren. For the full Fed letter, use the resource link.


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