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What's Next On Interchange?

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WASHINGTON (8/13/13)--The next development in the battle surrounding the Federal Reserve's debit interchange rule will take place on Wednesday in the U.S. District Court for the District of Columbia, and the Credit Union National Association will monitor the court action during the hearing that day.
The hearing follows District Court Judge Richard Leon's decision that orders the Fed to go back to the drawing board on its rule that implements the so-called Durbin amendment of the Dodd-Frank Act that capped debit card interchange fees and set network non-exclusivity regulations. Leon said the Fed's rule disregarded Congress's intent when deciding how much financial institutions can charge merchants for debit card transactions and that the Fed's cap is too high.
Leon vacated the Fed rule, but issued a temporary stay on his own order to keep the current rule temporarily in effect. The judge did not define how long the stay would be in effect, and that is a key issue expected to be a focus of the Wednesday convening.

Although there is no way to predict what Judge Leon might do Wednesday, or what the parties to the case might argue in front of him, there are a number of possibilities, including:
  • Leon can declare the hearing to be simply a scheduling session, charting out deadlines for future briefing and/or dates for future hearings in the case;
  • Only the Fed can appeal the district court's decision. If it decides to appeal, the agency could make that decision public at the hearing, and could also ask for a stay of the ruling throughout the appeals process;
  • The Fed could ask for more time to decide whether to appeal, arguing that there has been inadequate time to make that determination at this time; or
  • The Fed could announce that it is in the process of developing a new rule and could ask the court to continue the stay long enough to approve the new rule and make it public.
CUNA has met with a broad coalition of financial industry representatives to develop a response strategy and approach to the interchange decision. CUNA has also detailed to Fed staff the negative impact the district court ruling would have on credit unions and other small card issuers.
CUNA warns that the court's decision will challenge credit unions to continue their debit card programs without incurring drastic cuts in revenue, or imposing additional fees on their members. Credit unions with under $10 billion in assets will still be shielded from the interchange rule. CUNA notes, however, that all issuers, regardless of size, will be affected by the decision and the Durbin regulation with regard to routing and exclusivity provisions.
The current Fed interchange standard limits debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allows an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap.
CUNA has developed a new password-protected web page for CUNA and credit union league members. The page provides resources about the litigation and highlights CUNA's efforts, including providing a range of materials that explain the decision and the next steps for credit unions. To access the page, use the link.

FAQ+ Puts NCUA Answers At Your Fingertips

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ALEXANDRIA, Va. (8/13/13)--FAQ+, a new credit union-specific search engine unveiled by the National Credit Union Administration on Monday, will help users answer common questions and find new information on training opportunities, grant programs and other topics.

The FAQ+ search engine was developed by the NCUA's Office of Small Credit Union Initiatives (OSCUI). OSCUI Director William Myers said NCUA is "constantly striving to improve communications and access to information, and this is another tool to help us accomplish that objective."

The search engine, which is placed on the right side of the NCUA's OSCUI website (see resource link), connects users with web links, documents, videos, agency forms and other NCUA site content.

Questions that are not answered in an FAQ+ search can be forwarded on to agency staff. The search engine and the related database will also be updated and expanded by the agency on an ongoing basis.

Two CU Reps Among Fed 2014 Advisory Council Members

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WASHINGTON (8/13/13)--Michael J. Castellana, president/CEO of SEFCU, Albany, N.Y., and Glenn D. Barks, president/CEO of First Community CU, Chesterfield, Mo., are among the 12 members announced by the Federal Reserve Board Monday for its 2014 Community Depository Institutions Advisory Council (CDIAC).

The council advises the Fed board on the economy, lending conditions, and other issues, and members are selected from representatives of commercial banks, thrift institutions and credit unions serving on local advisory councils at the 12 Federal Reserve Banks.

One member of each of the Reserve Bank councils serves on CDIAC, which meets twice a year with the Federal Reserve Board in Washington.

The Fed said Drake Mills, who is president/CEO of Community Trust Bank, Ruston, La., will serve as president in 2014. John B. Dicus, chairman and president/CEO of Capital Federal Savings Bank, Topeka, Kan., will serve as vice president.

Use the resource link to see all 2014 members' names.

CUNA Survey Identifies Top CU Concerns With CFPB Remittance Rule

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WASHINGTON (8/13/13)--While the Consumer Financial Protection Bureau's tweaks to its remittance rule provided some significant, helpful changes, credit unions remain concerned about the overall rule, a Credit Union National Association survey has revealed.

The survey results are detailed in CUNA's Regulatory Advocacy Report this week.

More than 90% of survey respondents believe the latest changes, which included making certain disclosures optional for financial institutions, were "very helpful" or "somewhat helpful."

However, more than 40% said they would need more time to comply with the regulation, in spite of the CFPB's decision to delay the rule's effective date until Oct. 28.

The survey also showed that:
  • About 35% of respondent credit unions will have to increase service fees;
  • Eight percent plan to reduce international wire or automated clearinghouse services;
  • Nearly one-in-four (23%) will discontinue international wire or ACH completely; and
  • About 6% of respondents will discontinue all types of international remittances.
Other issues highlighted by the survey results include working with correspondent institutions and vendors to implement the disclosures in time, as well as training staff.

"Some small credit unions plan to continue to offer remittances if they remain under the safe harbor exemption level, which is 100 or fewer transfers per year, because they do not have the resources to comply with the rule. In addition, many credit unions continue to be concerned with their liability and risk on transfers to foreign institutions, despite the changes to the rule in this area," CUNA Deputy General Counsel Mary Dunn wrote.

CUNA is following up with those credit unions that have continuing concerns and will be pursuing these issues aggressively with the CFPB, and working for greater regulatory relief, in upcoming meetings with the bureau.

The CFPB last week also released an updated small business guide for those impacted by the remittance rule.

The bureau also produced a video with even more information on the rule for remittance providers.

For the full CUNA Regulatory Advocacy Report, and more on the CFPB remittance resources, use the links.