CU Times Washington Reporter
WASHINGTON — In a closely divided vote that did not break along party lines, a House panel approved a measure to order merchants and card issuers to negotiate interchange fees.
The Credit Card Fair Fee Act (H.R. 5546) passed the House Judiciary Committee 19 to 16 last Wednesday. Even though the bill was amended to incorporate some of the concerns expressed by credit unions, the industry's trade associations continue to oppose it and expressed optimism that it won't be enacted this year.
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House Judiciary Committee Chairman John Conyers (D-Mich.), the bill's sponsor, amended the bill to include a provision allowing credit unions and small banks to exempt themselves from negotiations over interchange fees if they believe it would benefit them. It also eliminated a controversial provision of the original bill that said if both sides could not reach an agreement, they would have to submit to binding arbitration by a panel of judges appointed by the Department of Justice and the Federal Trade Commission.
Conyers said the bill would "level the playing field" controlled by the two big guys, MasterCard and Visa. While several opponents, including the panel's top Republican, Rep. Lamar Smith (R-Texas), said the measure would limit consumer choice and interfere with the workings of the
marketplace.
CUNA and NAFCU both pushed hard against the measure, including sending letters to committee members and chairmen as well as buying joint advertisements in the three newspapers that cover Capitol Hill: The Hill, Roll Call and Politico.
CUNA Senior Vice President of Legislative Affairs John Magill said that while credit unions are pleased that the panel recognized their concerns, singling them out as Conyers' amendment did, hurts the industry "and creates a target" for our rivals.
He added that the closeness of the vote and the partisan divide on it, makes it unlikely to pass this year.
J. Craig Shearman, vice president government affairs/public relations of the National Retail Federation, the measure's strongest industry backer, praised the committee vote but agreed with Magill that the chances of passage this year are slim.
"Despite the changes made, it's a landmark bill that shows Congress is ready to crack down on the greed of the credit card companies," he said. "We don't expect it to get to the president's desk, but it's laying the groundwork for next year."
Credit unions have long maintained that because they have smaller margins, a system that sets fees too low will cause them to lose much-needed revenues that they can't make up for by issuing stock. Also, driving credit unions out of the credit card market could cause higher interest rates and predatory pricing.
Representatives of the retail industry counter those arguments by saying that capping fees will rein in the credit card industry's excessive profits and benefit consumers.
Opponents of the measure have noted that that there is no guarantee lower fees would be passed on to consumers.
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