CUNA Continues to Push for Interchange Fixes
CUNAâ€™s regulatory update includes details about interchange efforts, plus a preview of the NCUA Board meeting.
May 17, 2011
Debit Card Interchange Fees
Last Thursday’s Senate Banking Committee hearing was very important in terms of key regulators reinforcing the harm that the Dodd-Frank debit interchange fee amendment will impose on small issuers, including credit unions. Responding to questions from our interchange champion, Senator Jon Tester (D-MT), Federal Reserve Board Chairman Ben S. Bernanke said the Federal Reserve is “still not sure” how or if the exemption for small issuers (less than $10 billion in assets) from the rate setting provisions will actually work. He indicated the Federal Reserve is considering requiring the networks to make their fee structures public. (This is one of the recommendations CUNA developed that we urged the Federal Reserve to consider in the event Congress does not approve a delay of the interchange amendment.)
Senator Tester said that the Federal Reserve is undoubtedly under pressure, including from “at least one person from the Senate,” and he expressed serious concerns about the impact of the interchange amendment on community banks and credit unions particularly in rural areas. Bernanke agreed that these issuers “have good reason to be concerned.” In separate questioning, FDIC Chairman Sheila Bair added her concerns that small issuers will be stressed by the loss of income under the interchange amendment.
CUNA will use these statements to the greatest extent possible in urging support in Congress for a delay of the interchange amendment. Meanwhile, since NCUA has not yet corrected its chart accompanying the letter it sent April 29 to Chairman Bernanke (read more here), we are undertaking a quick survey of credit union issuers regarding their debit card costs. While we want to make sure that the Federal Reserve and Congress have information regarding credit union costs that is totally accurate and complete, we do not want to call more attention to the agency’s chart. So far, it has apparently not generated much interest at the Federal Reserve or on Capitol Hill, according to our sources. Our plan is to have our information at the ready to ensure policymakers are fully aware of the costs to credit unions associated with debit cards.
Rumors still circulate as to when the Federal Reserve Board will issue the final rule; it could be next week or next month or even into July (the effective date of the provisions on fee limits is July 21, 2011). While many are saying around May 21, no one knows for sure besides a few at the Federal Reserve and they are not talking. We will keep you posted on all developments regarding debit interchange fees.
NCUA Board Meeting
There are two items of particular interest on the NCUA Board meeting agenda for this week. The first is a final rule to implement a prohibition on golden parachute arrangements and indemnification payments in certain circumstances. The scope of the proposal is narrow—indemnification payment limits would only apply to proceedings brought by NCUA or a state regulator where the wrong-doer was assessed a civil money penalty, removed from office or subjected to a cease and desist order. The golden parachute provisions would apply if the credit union is in insolvent, in conservatorship, has a CAMEL 4 or 5 rating or is in “troubled condition.” Even though the application would be limited, CUNA opposed the proposal as unnecessary and unclear. We also objected to it because the rule could make it difficult for credit unions to attract board members. We have urged NCUA to address these concerns.
Another issue on the agency’s agenda is voluntary prepayment of Corporate Credit Union Stabilization Fund assessments. A number of credit unions have told us they would like to have the option of making prepayments, and CUNA has had ongoing discussions with senior NCUA officials about how this could work.
A copy of the full agenda is available here. We will provide a summary, as usual, following the agency’s meeting.
Comment Letter on CFPB Consumer Complaint Form
CUNA recently submitted a letter to the CFPB in response to its request for comments on the fields that will be used in consumer complaint forms. Under the Dodd-Frank Act, the CFPB is responsible for setting up a centralized system to collect and respond to consumer complaints about financial products and services. We raised several concerns that the complaint process in general could lead to an increase in the number of meritless complaints filed with the Bureau. Since each complaint filed against a credit union or other institution will require valuable staff time to resolve, we urged the CFPB to develop a process to filter the complaints, ensuring that only those which are legitimate are pursued by the Bureau. CUNA reinforced to the CFPB that credit unions are generally subject to relatively few consumer complaints.
The letter stressed, in light of the current regulatory environment, it is critical that the CFPB’s complaint process not increase the burden on credit unions. In addition, we urged the Bureau to solicit additional public comments on the potential burden on credit unions.
Questions or comments? Contact Director of Regulatory Affairs Jaycee Winn: 503.350.2209, [email protected].