Saying it's needed to protect credit unions and community banks, Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) on Tuesday offered an amendment to delay implementation of the Federal Reserve's rule regulating debit interchange fees.

The amendment calls for a six-month study by the NCUA and other regulators to consider the fixed and incremental costs to the financial institutions of the new rules, whether the rules will adversely affect consumers, and whether the small issuer exemption is feasible.

Senate Majority Leader Harry Reid said Tuesday afternoon that the vote on the amendment will take place at 2 p.m. on Wednesday.

If the Fed and at least one other regulatory agency make any of the above determinations, then the Fed must rewrite debit interchange rules within six months. Otherwise, the Fed rule would move forward.

Tester said in his Senate speech that without changes, institutions such as the $19 million Community 1st Federal Credit Union of Miles City, Mont., “will not see this promised benefit'' that backers of the Durbin Amendment to the Dodd-Frank Act promised.

Backers of the Durbin Amendment said that exempting small issuers would make the system more equitable, but many people have said the two-tiered system isn't feasible and will cause discrimination against small issuers.

Sen. Dick Durbin (D-Ill.) accused Tester and Corker of caring more about the big banks and said if they really cared about small issuers they would have crafted their amendment differently. He said the amendment would be a “direct hit'' on small businesses.

Tester's amendment also directs the Fed to study the impact of the small-issuer exemption after the rule is in effect for two years and provide recommendations to remedy any harm to credit unions and banks

Corker said the measure is needed because “the current rule is too narrow and doesn't allow the Fed to consider all the costs.''

In a letter to senators, CUNA President/CEO Bill Cheney wrote that the amendment would remedy the shortcomings in the existing legislation and protect small issuers

He wrote that “neither the statute nor the regulation makes credit unions immune from the impact of the regulation. All of the regulators of small issuers at the state and federal level have expressed concern regarding the impact of the debit interchange regulation on small issuers.”

In a letter to senators, CUNA President/CEO Bill Cheney wrote that the amendment would remedy the shortcomings in the existing legislation and protect small issuers

NAFCU President/CEO Fred Becker wrote lawmakers that while “some individuals and groups not affiliated with credit unions may want to tell you that they know what is best for credit unions, we urge you to listen to credit unions and their representatives when we ask for your support. After all, isn't it more important that action to significantly alter our nation's electronic payments system, one of the backbones of the 21^st century economy, is done right rather than quickly?”

Meanwhile, supporters of the original Durbin Amendment felt otherwise. “This bill is no compromise,” said David French, senior vice president for government relations at the National Retail Federation. “It is a sham intended to kill swipe fee reform even more quickly than his original bill and should be seen for what it is.”

The Fed issued a draft rule in December and was supposed to issue a final rule next month but has been delayed in doing so because it is still going through the large number of comments it received on the proposal. The final rule is supposed to take effect on July 21.

Acording to the proposed rule, the allowable costs for interchange would be limited to no more than the issuer's allowable costs divided by the number of electronic debit transactions on which the issuer received or charged an interchange transaction fee in the calendar year. Or the issuer could receive debit interchange capped at 12 cents per transaction.

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Tester, Corker Offer Amendment on Interchange Delay

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