Since the Dodd-Frank Financial Reform Act passed earlier this year, the LSCU and CUNA have worked on the regulatory process stemming from the interchange language that was added to the Act. This past Thursday, the Federal Reserve issued its proposed regulations enforcing the interchange provisions. The League will be sending a summary of the proposal, and information on how credit unions can comment to the Federal Reserve as they draft the final regulations. As you know, this is a very important regulation with significant impact on credit unions, and the League will be seeking every opportunity to mitigate its impact.
CUNA has put together a quick summary and the initial reactions of CUNA President/CEO Bill Cheney to the proposal issued regarding the regulation of debit interchange fee income. While the Fed has made efforts to address some of credit unions' concerns, the new proposal raises many issues CUNA and the League will be working on to improve and resolve.
Following the release of the proposals, CUNA President/CEO Bill Cheney sent a letter to Fed Chairman Ben Bernanke expressing his concern over the lack of any enforcement mechanism for the exemption for small issuers from the rate setting provisions that apply to large issuers, the low level cap – no more than 12 cents per transaction (7 cents under the safe harbor) – that would apply to debit interchange fees for large issuers and the multiple options merchants might have for routing transactions.
Outgoing House Financial Services Committee Chairman Barney Frank (D-MA) also sent a letter to Bernanke expressing his concern over implementation of the interchange amendment. Frank writes that he's concerned the implementation might have unintended consequences on community banks and credit unions while Congress is trying to reduce their regulatory burden.
You can read both letters in the MBL and Interchange Resource area. This is a password protected area of the LSCU website.