Interchange Fight Spreads to Fed CDIAC Panels
CUNA’s campaign to sway the Federal Reserve Board to revise the rules governing interchange debit caps turned its attention Wednesday to special bank/credit union panels set up last fall by Fed Chairman Ben Bernanke.
In an email sent to the more than two dozen CEOs who sit on the Fed-appointed Community Depository Institutions Advisory Councils, CUNA President/CEO Bill Cheney urged the CU leaders to make contact with regional Fed presidents to press the industry’s interchange cause.
“I am contacting you as a member of the Federal Reserve Bank’s CDIAC to request the president of your Federal Reserve Bank” to get in touch with individual Fed Board governors urging they consider the serious financial harm rules will have on CUs if implemented as proposed on July 21, Cheney said.
Cheney’s missive included 14 bullet points covering preservation of the two-tier markets and the danger of the cap being undermined by retailers. He also warned anew of the Fed’s failing to protect small issuers’ income from debit fees.
“If the Board adopts the proposal without making significant changes to improve the rule for small issuers, these institutions will be harmed,” said Cheney. “Federal Reserve Bank presidents are urged to weigh in with the Board now to help achieve as favorable an outcome for small issuers as possible.”
Martin Banecker, president/CEO of the $151 million Campbell Employees Credit Union of Cherry Hill, N.J. and one of 12 bank and CU executives on the CDIAC panel at the Fed in Philadelphia, said he received the Cheney letter on Wednesday.
Banecker said he expects to write Philadelphia Fed President Charles I. Plosser as suggested but “it’s hard to say what will result.”
“Our processor, Star Network, says it will maintain a two tiered system but who can say if that will last depending on what the Fed does,” said Banecker. “I have my doubts.”
The Senate on June 8 rejected a proposed delay of the new rule.