The initial reviews are in from the meeting this week between credit union CEOs, community bank CEOs and top brass of Federal Reserve banks, and so far the assessment of what was discussed on everything from interchange to Fannie/Freddie status was favorable.
“It was hardly a surprise that many of the same things that occupy credit unions also concern community banks and we also heard from the banks expressing frustration over the examination process and the difficulty experienced when regulation and examiner’s opinion become intertwined,” observed William J. Rissel, president/CEO of Fort Knox FCU, Radcliff, Ky. Rissel, joined by Glenn Barks, president/CEO of First Community CU in St. Louis, were the two CEOs from CUs–among 10 bank CEOs–taking part in a two-day session of the Community Depository Institutions Advisory Council of the Federal Reserve Bank of St. Louis.
Interchange and the income hit on financial institutions became the lead topic at the St. Louis event as well as at similar CDIAC sessions in Boston and in Richmond.
“The interchange discussion was enlightening but really it all depends on what the politicians do at the end of the month,” said Barks of First Community, referring to amendatory Dodd-Frank bills in Congress. Barks noted that among the participants in the St. Louis meeting was James Bullard, the St. Louis Fed president who he said “has a rebel reputation” in Washington dealing with Chairman Ben Bernanke.
Commenting on interchange, Rissel said also: “Based on my own experience with the St. Louis Fed and with Chairman Bernanke's comments to Congress, I believe the Fed understands that networks will not be willing to differentiate the interchange fee for smaller institutions and that smaller institutions will ultimately be affected.”
Bullard, he said, “seems to favor a policy that improves the efficiency of the payments system overall but more time to study the matter would allow the Fed to consider different options.”
Michael L'Ecuyer, president/CEO of Bellwether Community CU in Manchester, N.H. and a participant in the Boston Fed CDIAC meeting on Tuesday, said it was heartening to know “that regardless of charter, stock bank, mutual cooperative or credit union we all face the same negative implications from the Durbin amendment.” But also at the Boston meeting, there was considerable discussion about business lending “and how both banks and credit unions have money to lend but there are lots of companies out there whose financial condition may have worsened in recent months making them less than credit-worthy borrowers and that’s tough.” He also said the fate of Fannie/Freddie and FHA has become a lively topic “on exactly how the transition away” will take place.