Effort to Curb Interchange Fees Is Introduced by Sen. Durbin
WASHINGTON -- Credit unions are gearing up to try to defeat a Senate measure that would cap interchange fees, which they argue would hurt credit unions and make credit less available to consumers.
Sen. Richard Durbin (D-Ill.) introduced a bill to require major card brands to negotiate with merchants to reach an interchange settlement. If they can't reach an agreement, they'd have to submit to binding arbitration by a three-judge panel appointed by the Justice Department and Federal Trade Commission.
Durbin's measure (S. 3086) has no co-sponsors at this time and has been referred to the Senate Judiciary Committee.
"Simply put, this proposal seeks to apply artificial, draconian measures to a system that does not require them," NAFCU President Fred Becker said in a statement.
CUNA President/CEO Dan Mica wrote a letter to all senators saying that the measure was unnecessary and ill advised.
"Government-imposed price controls on interchange fees are more likely to increase credit and debit card costs that consumers bear, and make convenient credit less available," he wrote.
Retail establishments, who seek larger profits, say the bill is needed to make the system fairer and curb the excesses of the existing set up.
"This law gives retailers a seat at the table to negotiate fair and reasonable transaction fees with credit card companies," said John J. Motley III, the Food Marketing Institute's senior vice president of government and public affairs. "It would put an end to the anti-competitive and anti-consumer system in which the credit card company networks fix these fees in secret with impunity."
A companion bill (H.R. 5546) was introduced by House Judiciary Committee Chairman John Conyers (D-Mich.) and a hearing was held on it last month. It has 37 co-sponsors.
Flooding Shutters Iowa Branches; Former Chairman Loses Home
DES MOINES, Iowa -- Midwest floods wreaked havoc last week for both credit unions and their personnel with one retired chairman losing his home to a rain-swollen Wisconsin lake, all of it caught in spectacular footage on network TV.
"We really have a serious situation on our hands today," said James Niederhauser of the Iowa Credit Union League, which by mid-week was gearing up to provide aid to stricken employees or members at beleaguered CUs in several central Iowa cities hit by flooded rivers and reservoirs.
At the height of the Iowa crisis, half a dozen CUs reported various disruptions or evacuations underway at branches and other facilities.
Among CUs identified by the league as impacted immediately by the flooding were Cedar Falls Community CU, Iowa Community CU, Waterloo, and Des Moines Metro CU.
"I expect more disruptions as the day goes on and we're hearing from a lot of people who want to help," said Niederhauser, who serves as the league's director of credit union growth. Cedar Falls Community CU reportedly has shut its downtown branch with all of downtown businesses in the northwest Iowa City closing down.
That comes despite national news reports that a levee protecting the city from the Cedar River had held overnight though water had been seeping under sandbags.
The league said it is "doing all we can to keep communication lines open."
Meanwhile, Southshore CU of Cudahy, Wis., said it was making plans to organize a relief fund for its retired chairman, Thomas Pekar, who saw his home break up and fall into the Lake Delton rapids June 9 with national TV coverage showing the $380,000 house split into two pieces.
"It's all very sad for Tom who had actually sold some vacation property elsewhere so he and his wife, Tina, could be in this home, which they just loved overlooking the lake," said Chris Rosland, president/CEO of Southshore.
Pekar, a former Cudahy math teacher who retired in 2007 after 15 years as chairman and 20 years on the board, had moved into the home three years ago. The home's fall into the lake along with three others was apparently due to a gullying effect created by the structure's closeness to a nearby channel and county road. The home's foundation on a sand base was apparently eroded by the rain deluge hitting the lake, it was reported.
Pekar, speaking from a Wisconsin Dells area motel where he is staying temporarily, said he was grateful to the Southshore Board for its support.
"It's been devastating for us," said Pekar who actually watched the home collapse from a safe site across the lake. "We were alerted at two in the morning that we might have problems and then we were told all was OK to find out later it wasn't."
In Iowa, a spokesman for state Superintendent of Credit Unions James Forney was awaiting damage reports from examiners regarding many of the affected Iowa cities.