Credit Unions Urge Congress to Stop, Study, Start Over on Interchange

Credit unions today urged Congress to halt the progress of the Federal Reserve’s interchange proposal and study the impact that interchange changes would have on financial institutions and consumers alike before the interchange rulemaking process can continue.

Credit unions today urged Congress to halt the progress of the Federal Reserve’s interchange proposal and study the impact that interchange changes would have on financial institutions and consumers alike before the interchange rulemaking process can continue. View the archived testimony.

Testifying on behalf of his credit union and the Credit Union National Association (CUNA), Allied CU, Stockton, Calif., President/CEO Frank Michael joined representatives from several financial institutions, a small business, and nationwide convenience store chain 7-11 during the House financial institutions and consumer credit subcommittee’s hearing on the economic impact of interchange fee changes. Read Michael’s prepared testimonyRead copies of the other witnesses’ testimony.

Michael addressed not only flaws in the statute, but the Fed’s implementation plans as well, specifically focusing on how the Fed’s proposed implementing regulation could render the proposed exemption for institutions with under $10 billion in assets meaningless.

“Simply being exempt from the language of the regulation does not guarantee that credit unions with under $10 billion in assets are unaffected by the regulation,” Michael said. “If this proposed regulation is implemented, it will adversely affect all financial institutions that offer debit cards, as well as their members or customers who use debit cards.”

The Fed is accepting comments on the interchange provisions until February 22. If you haven’t already commented, please comment today.

Currently, 115 comments on the proposed rules have been registered from Northwest credit unions as a result of the Operations Grassroots effort in the District offices led by Northwest Credit Union Association (NWCUA) Director of Regulatory Advocacy Jaycee Winn over the past 45 days. With just three full days left, your participation is urgent. Comment now!

In addition to credit union comments, the NWCUA has enlisted the help of Oregon’s congressional delegation to offer their support of the credit union position on this issue.

Credit union supporter Rep. David Wu (OR-1) wrote: “I am concerned that these regulations, if not carefully crafted and properly implemented, might have the unintended consequences of making it difficult for credit unions and community banks to offer electronic debit services to their customers.”

Read Rep. Wu’s letter to Ben Bernanke.

Read the CUNA NewsNow report.