Like other CEOs in wait-and-see mode regarding the Federal Reserve’s debit cap vote today, Jan Roche of the $1.3 billion State Department FCU cautioned against hasty industry moves since consumer behavior could play a big role in how much losses CUs might suffer.
Speaking out Tuesday as a member of a special Federal Reserve Bank of Richmond financial panel, Roche, head of the Virginia-based CU, said, “We really don’t know how clerks, consumers and merchants will react to these new rules and we may be surprised at the outcome.”
Just how the two-tier market might “play out” under the proposed debit cap remains a great uncertainty, she said, but “consumers won’t tolerate having to pick the right card and neither will clerks sorting out which card to accept.”
A clerk “has to sit there and tell the customer at checkout, ‘we’ll take this card but not that one,” observed Roche. Those kinds of delays and confusion could produce results that conceivably benefit CUs; she said noting, however, that at the moment her CU stands to lose $2 million a year in interchange income. “That’s 20% of our revenue,” she said.
After the Fed acts today, CUs, she said, must continue their campaign of vigorously challenging the interchange rules and pursue the delays despite the Congressional setbacks.
On that score, Roche has already played a part. She is a member of the Richmond Fed’s Community Depository Institutions Advisory Council, composed of community bank and CU leaders, which already held one meeting last March with interchange briefly discussed.
CUNA two weeks ago called on all CEOs of the 12 Fed district panels to lobby actively with Fed district presidents and subsequently with Fed governors to delay interchange impact.
Though that effort has not borne much direct fruit, noted Roche, “that doesn’t mean we can’t continue the fight as Bill Cheney has done so expertly,” referring to the CUNA CEO.
In dealing with district Feds, another member of the Richmond Fed’s CDIAC, Carl Ratcliff, president/CEO of the $350 million APNB FCU of Chesapeake, Va., said he did not hold out much hope regional Fed presidents could sway the Fed Board at this late date.