Provisions of a regulatory reform bill aimed at increasing disclosure requirements for financial institutions and other providers of wire transfer and remittance services violate the Uniform Commercial Code and could prevent credit unions from offering those services.
That's the argument made by CUNA President/CEO Dan Mica and WOCCU President/CEO Pete Crear in a letter sent to Senate Banking Chairman Christopher Dodd (D-Conn.) yesterday and released today.
Mica and Crear wrote that the bill, as currently crafted, hurts U.S.-based financial institutions because it would classify certain transfer services-such as Fedwire and ACH--as remittance services and make institutions that provide them liable for disclosing all costs up front. CUNA and WOCCU maintain that because credit unions don't control the entire transaction process, they may not know the total transaction costs at the time the member initiates the transaction.
The two association leaders contend that because some of the large money transfer companies-such as Western Union and MoneyGram-have control of more steps of the transfer process than credit unions, they will be the only enterprises able to offer electronic fund transfers.
The Senate Banking Committee voted along party lines on Monday to send Dodd's bill to the full Senate but it is not certain when the bill will be discussed by the full Senate.