Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON-Amidst a montage of bills affecting the financial services industry, the House Financial Services Committee approved an amendment to the business checking and sterile reserves bill, which would continue the Federal Reserve’s bank fee study and include credit unions. In a mark up of several bills, the Fed’s Annual Report to Congress on Retail Banking Fees and Services of Depository Institutions did not get lost in the shuffle. Committee Ranking Member Barney Frank (D-Mass.) offered the amendment to H.R. 758, the Business Checking Freedom Act, which also serves to permit banks to pay interest on business accounts two years after enactment and allows the Fed to pay interest on the credit union, bank, and thrift reserves they hold to help conduct monetary policy. While credit unions are already permitted to pay interest on member business accounts and do not oppose banks’ ability to do so, credit union trades have been working on the provisions regarding sterile reserves. Credit unions have often used the Fed fee study data to compare bank and credit union rates and fees for checking, savings, and other accounts and transactions, but credit unions have never been included in the study. Credit unions and community banks have been advocating the continuation of the study while larger banks, which typically have higher fees, have been opposed to it. In a recent hearing on the bill, a Fed representative said the Fed does not object to continuing the study. “Particularly since the passage of bank modernization legislation, there is a wider assortment of financial products, and related fees, in today’s marketplace,” CUNA President and CEO Dan Mica said. “Consumers need more, not less, information about the costs associated with financial transactions.” A CUNA survey performed last year found more than twice as many credit unions as banks offer free checking accounts, and credit unions are less likely than banks to charge fees for overdrafts. Credit unions also charged lower fees for nonsufficient funds and overdrafts. Also considered in the mass mark up was H.R. 522, the Federal Deposit Insurance Reform Act, which credit union lobbyists have been keeping an eye on. The bill would merge the Bank Insurance Fund and the Savings Association Insurance Fund, eliminate the automatic 23-basis point premium when the reserve falls below 1.25% for more than one year, and create a reserve range eliminating the 1.25% reserve ratio. While there was agreement on these provisions, more than one attempt was made to eliminate an increase in coverage limits on several accounts. None were successful. The bill would still increase individual account coverage to $130,000 and index it to inflation, double coverage limits on IRAs and 401(k)s, and increase coverage on municipal deposits. “I am very pleased that the Committee has recognized the importance of reforming the deposit insurance system and has moved forward so quickly on this legislation. This is an excellent start on getting the bill enacted this year,” FDIC Chairman Don Powell commented. The deposit insurance reform bill also received praise from the banking community, even though support for the coverage increases is not unanimous. Credit union trade associations have been working to ensure parity on the coverage issue, which is currently in the bill. The House Financial Services Committee also approved without amendment H.R. 21, the Unlawful Internet Gambling Funding Prohibition Act, which would bar Internet gambling sites access to the U.S. financial services system by preventing the use of credit cards, wire transfers, or any other bank instrument to fund illegal Internet gaming transactions. The credit union trade groups have also been watching this legislation as some credit unions contend Internet gambling contributes to bankruptcies. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.