Accounts of up to $250,000 at credit unions and banks would be permanently insured beyond the current expiration date of 2013, as a result of an amendment approved last week by the House-Senate conference committee on regulatory overhaul.
The committee also extended for two years the FDIC’s unlimited coverage of noninterest bearing transaction accounts.
At the height of the financial crisis in 2008, lawmakers temporarily raised the cap from $100,000 to $250,000 as a way to instill public confidence.
However, the bulk of the items of interest to credit unions, such as an amendment giving the Fed the power to regulate interchange fees and the structure on scope of the consumer financial protection regulator, aren’t scheduled to be taken up until June 22.
Senate Majority Whip Richard Durbin (D-Ill.), the sponsor of the interchange amendment, and his allies have been pushing hard to keep it in the final bill.
Sen. Durbin wrote CUNA and the Independent Community Bankers of America that he is
disappointed with the arguments they have made and derided as “absurd” the claim that small financial institutions would be hurt by the amendment.
“Even corporate spite has some boundaries, and sacrificing revenues seems inconsistent with the profit-driven actions that Visa and MasterCard have taken to date,” Durbin wrote.
CUNA President/CEO Dan Mica responded ?that “practitioners and politicians agree: This will ?not work.”
The amendment 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.
American Family Voices President Michael Lux said they placed the ad because “I never understood why small and medium-sized financial institutions get into bed with large corporations who already control so much of the market.”
Appropriations Committee Subcommittee on Financial Services at which the Treasury Department released a report saying the U.S. Government could save between $36 million and $39 million in interchange fees annually if it had the right to negotiate for better terms.
The report, from the department’s Fiscal Management Service, said that interchange and related card fees cost the government more than $116 million, and it could save between 45 cents and 49 cents per transaction if the Treasury Department could negotiate for better rates.
NAFCU President/CEO Fred Becker wrote subcommittee members urging them to keep in mind the report’s recommendation that payment processors and acquiring institutions, such as credit unions should be assured “realistic compensation.”
Congress is not expected to take up legislation this year that would allow the government to negotiate interchange fees.