Removing Barriers Blog

Letter to Senate Banking prior to hearing with Fed
Posted May 25, 2021 by CUNA Advocacy
CUNA wrote to the Senate Banking, Housing, and Urban Affairs Committee prior to the committee hearing semiannual testimony from Fed Vice Chair for Supervision Randal Quarles.  The letter discussed how a proposed Federal Reserve regulation could adversely impact credit unions by increasing regulatory burden.

"CUNA is concerned that proposed Regulation II could adversely impact credit unions by unnecessarily increasing the regulatory burden associated with providing credit union members debit cards. The Board’s proposed updates to Regulation II (12 C.F.R. pt. 235) that seeks to provide “clarification” to the regulation of debit card routing requirements. In our view, the proposal represents much more than a clarification but instead would add new requirements to Regulation II that would increase the complexity and costs associated with debit cards. CUNA plans to provide fulsome comments to the Board detailing credit unions concerns; nonetheless, it is appropriate for the Committee in its oversite role to explore the proposed rule and its implications with Vice Chairman Quarles." 

Credit unions can comply with the existing regulations by issuing debit cards carrying a signature network and an unaffiliated network. The proposed rule would require issuers to offer two unaffiliated networks which must also be capable of processing transactions under a new framework of expectations surrounding merchant type, transaction and location.

CUNA is currently working on detailed comments to send to the Fed regarding credit union concerns with this proposal.