The amendment allowing the Federal Reserve to regulate interchange will increase transparency to consumers and force card issuers to design their products in a way that consumers are aware of all the costs, consumer advocate and Harvard Law Professor Elizabeth Warren said today.
"I believe in every form of transparency in pricing credit to consumers," Warren said in response to a question from Credit Union Times during a conference call with reporters organized by Americans for Financial Reform.
She added that the amendment "makes it clear what some of the buried costs of the transaction are so that consumers have more control over their purchases."
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Warren, who in a scholarly article proposed the idea for the new entity that is a key part of the regulatory overhaul bill, said she is "quite skeptical," of the argument that credit unions and banks have made that any savings from reduced interchange fees won't be passed along to consumers.
"This is what creditors say all the time," she said.
The amendment, which is in the Senate-passed version of the bill but not the one passed by the House, authorizes the Federal Reserve to ensure that debit card fees are "reasonable and proportional," in relation to processing costs. It excludes credit unions and community banks with assets of less than $10 billion. It also allows merchants to set a minimum or maximum amount for each transaction and let them offer additional discounts for using a certain type of card or cash. House and Senate conferees will meet later this month to iron out the differences in the bills. And those lawmakers are the subject of intense lobbying on the interchange issue.
Warren also said she hopes conferees won't give additional carve outs to auto dealers or others from being subject to the oversight by the new consumer financial products regulator.
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