CUs Fighting Interchange Provision in Senate
At press time, CUNA and NAFCU and their allies were fighting to kill an amendment to further regulate interchange fees that their adversaries were couching in populist terms.
Senate Majority Whip Richard Durbin (D-Ill.) sponsored an amendment to the regulatory restructuring bill pending in the Senate that would authorize the Federal Reserve to ensure that debit card fees are "reasonable and proportional," in relation to processing costs. It would exclude credit unions and community banks credit unions with assets of less than $1 billion,
It would also allow merchants to set a minimum or maximum amount for each transaction and let them offer additional discounts for using a certain type of card or cash.
Durbin is framing the issue as helping small businesses and consumers.
"American businesses and consumers are getting nickeled and dimed by the big banks, who end up making billions from these hidden fees," he said on the Senate floor.
CUNA and NAFCU are strongly opposed to the amendment and both say even the exemption for credit unions and small banks is problematic.
"What has been labeled a carve out is in fact a double-edged sword. By directing the Federal Reserve to regulate only the debit interchange of big banks, the amendment makes our institutions' debit cards the most expensive for a merchant to accept-something the market will not tolerate for long," CUNA President/CEO Dan Mica and Independent Community Bankers of America President/CEO wrote senators.
The trades were also pushing an amendment by Sen. Sam Brownback (R-Kan.) that would exempt credit unions and community banks with assets of less than $10 billion in assets wouldn't be covered by any regulations promulgated by the new consumer agency.
The amendment would transfer rulemaking authority over institutions of $10 billion or less in assets to the NCUA and other safety and soundness regulators from the consumer regulator. As the regulatory overhaul bill is currently written, all financial institutions would have to comply with the regulations issued by the new consumer regulator but only those with assets of $10 billion or more would be examined by the new entity. Consumer laws would be enforced by the safety and soundness regulator, such as the NCUA.
Lobbyists for CUNA and NAFCU said it wasn't clear when or whether Brownback's amendment would be brought to the floor.
NAFCU President/CEO Fred Becker said the amendment is beneficial because it would ensure that the legislation focuses on "Wall Street and the other bad actors and not those that have continued to serve Main Street, such as credit unions."
On a party line vote, lawmakers defeated a GOP amendment that would have left responsibility for enforcing consumer protection laws for banks, thrifts and credit unions with the prudential regulator. As it now stands, the reform bill would create a new division within the FDIC to supervise and enforce consumer laws for nonbank mortgage originators and other providers who have violated the consumer protection statutes.