Since its introduction last year as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the interchange price cap amendment has been a source of great consternation for our industry. NAFCU, both in principle and substance, has fought it fervently.
We stood at the forefront in recognizing that any measure that would split credit unions by asset size is dangerous to our industry. That is why we adamantly opposed the application of the Consumer Financial Protection Bureau to credit unions with over $10 billion in assets. Today, we see the first repercussions of a presumed exemption of credit unions below $10 billion in assets from the interchange price cap, a "protection" that simply is not possible in the marketplace and could very well imperil the competitive landscape of our industry.
We very much appreciate credit unions’ strong support of our rallying cry. Many have followed our call to place information on their websites informing their members of the adverse consequences of interchange price caps, including the potential for higher fees, lower rates on savings, higher loan rates and decreased services. Credit union grassroots and outreach activities have helped shine a much-needed light on this issue and garner vital support.
In the most recent hearing by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, there was a wealth of bipartisan recognition of credit unions’ concerns. Many expressed skepticism about retailers’ claims to pass along savings to consumers. Others articulated concerns about the Federal Reserve’s failure to survey credit unions and community banks before issuing the draft rule. Still others validated the need for a delay to ensure proper consideration was afforded for fraud costs and consumer protections. It is a testament to the breadth and depth of credit unions’ collective response to our call to action that there was not a single voice of dissent but rather a chorus from the members of Congress questioning these critical elements.
Perhaps the most helpful voice on this matter was that of Federal Reserve Board Chairman Ben Bernanke, who offered his opinion before the Senate Banking Committee. His recognized that the interchange fee carve-out for smaller institutions will likely not work and that it is very much an open question as to whether consumers will experience reduced costs from retailers.
Despite all the misleading pro-consumer propaganda, many are now realizing the unrealistic nature of consumer claims when all factors point to the debit card interchange fee cap actually raising fees and limiting availability of reasonably priced services and products to consumers.
With Congress returning from its Presidents’ Day holiday, we cannot relent or falter in our efforts. As Federal Reserve Governor Sarah Bloom Raskin indicated in her comments on Feb. 17 before the Subcommittee on Financial Institutions and Consumer Credit, it is up to Congress to determine if the Federal Reserve needs more time to study the interchange price cap issue. So we must redouble our efforts to ensure that every member of Congress recognizes the need to stop this Draconian measure from being implemented.
While we have made progress, we must continue our resolve. Through our collective grassroots efforts, I know we can achieve success.
Fred R. Becker Jr. is president of NAFCU. Contact 703-522-4770 or firstname.lastname@example.org