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Royce CUs holding the bag on interchange rule
WASHINGTON (3/2/11)--Speaking before the 2011 Credit Union National
Click to view larger image Speaking to the morning general session Tuesday, Rep. Ed Royce told the CUNA GAC audience that the Federal Reserve Board's proposed interchange feed rule has left small financial institutions “holding the bag.” (CUNA Photo)
Association's Governmental Affair's Conference, Rep. Ed Royce (R-Calif.) said the proposed interchange rule has left small financial institutions “holding the bag.” Royce said Federal Reserve Board Chairman Ben Bernanke has echoed the same concerns as the National Credit Union Administration and the Federal Deposit Insurance Corp.: that the exemption in the proposal for financial institutions under $10 billion in assets is unworkable. “To ensure that small institutions are truly exempt, to ensure that fraud costs are truly accounted for, we have got to slow the process, study the issue and get this right in legislation,” Royce said. “If we fail to do that, then the debit network is going to be weaker and small institutions are going to be at a disadvantage.” Royce also said credit for small businesses is “a way to build our communities.” Business owners in his district have told him they lack access to credit, he said. Introduced by California/Nevada CU League President Diana Dykstra as a “friend of credit unions,” Royce said he will continue to work to expand business lending authority for credit unions. “We have gained a great deal of traction on this issue, and this is just the beginning of our efforts. Sometimes it takes a while to get common sense through the process,” Royce said. Royce railed against the newly formed Consumer Financial Protection Bureau (CFPB), which he called “a massive new government agency” that creates competing sets of regulators. He opined that with the CFPB in place, the government is more likely to dictate the price of financial products, increase the cost of credit and decrease its availability. Also, revisions to the Community Reinvestment Act are “off the table,” according to Royce. He said expansion would be artificial intervention in the housing markets, similar to government-sponsored enterprises that contributed to the financial crisis. Instead, he said, credit unions should focus their efforts on telling legislators how they give back to their communities and talk about legislation that affects their day-to-day operations. “You’re here in force this week,” Royce said. “You’re one of the most engaged groups we see in Washington D.C.” The CUNA GAC wraps up today with credit union visits to Capitol Hill to discuss credit unions' key legislative issues.


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