House and Senate conferees will tackle the issues of greatest interest to credit unions in the financial overhaul when they meet later today.
On interchange, they are slated to discuss a House offer which keeps much of the language in the Senate bill giving the Federal Reserve the power to regulate interchange fees. Although there are exemptions for small financial institutions and the Fed has leeway if banks and credit unions raise concerns about the cost of fraud prevention, CUNA and NAFCU both said that the language is enough for them to oppose the whole bill.
"The House offer fails to address the most significant concern of credit unions, specifically that the carve-out envisioned by the provisions is unworkable and not meaningful. Nothing in the House offer directs the payment card networks to operate the two-rate system that would be necessary for the carve-out to work; nothing in the House offer includes enforcement provisions to require merchants to accept credit union cards were a two-rate system to exist; further, the legislation provides significant disincentives for payment networks to honor the carve-out by implementing a two-rate system," CUNA President/CEO Dan Mica wrote in a letter to lawmakers.
He added that "credit unions and community banks continue to be collateral damage, even in the proposed solutions."
NAFCU President/CEO Fred Becker said that the legislation "would still put credit unions at a severe disadvantage compared to large credit card issuers. That in turn, would hurt the 92 million Americans who rely on credit unions for debit and credit card services at reasonable rates with low fees."
The House offer also exempts automobile dealers and pawnbrokers from being subject to the rules of the new Consumer Financial Protection Bureau, which would be housed in the Federal Reserve but headed by a presidential appointee.
The Consumer Federation of America said excluding car dealers would leave out a major supplier of consumer credit.
"Even if the conferees give current federal regulators more tools, that still doesn't give them the resources to oversee a market with 50-60 million transactions per year. The CFPB will be the cop on the beat for lending, and this beat should include auto lending," said Consumer Federation of America Legislative Director Travis Plunkett.