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House Committee plans hearing on interchange proposal

Last week, the House Financial Services Committee announced its tentative schedule of hearings for February and March. Included in the schedule is a hearing on the Federal Reserve’s proposed rule on debit interchange. The Financial Institutions Subcommittee, chaired by Rep. Shelley Moore Capito (R-WV), is scheduled to hold the hearing on Feb. 17 at 10 a.m.

The League and CUNA have been actively involved in working with the staff of Committee Chairman Spencer Bachus (R-AL) to ensure that they understand the problems created by the proposed rule, and to explain the need for delay and changes in implementation. In addition to regular conversations with contacts in Congress, the League held a conference call with key committee staffers two weeks ago, asking several credit union CEOs to join us and explain how the proposed rule would impact their credit unions and their members. This put a very sharp focus on the problems and laid excellent ground-work for the hearing.

In December, the Fed issued for public comment its proposed regulations enforcing the Durbin Amendment provisions of the Dodd-Frank Wall Street Reform Act. The law, as passed, requires the Fed to develop price controls on debit interchange fees but creates an exemption for card issuers under $10 billion in assets. Unfortunately, the proposed rule does not maintain sufficient safeguards to ensure that a two-tiered system of pricing is created to make the exemption a reality, and that merchants are not prohibited from discriminating against smaller issuers.

The announcement of a hearing is good news for credit unions and creates a greater possibility of changes in the final rule that might address concerns. While the Congressional review of the proposed rule is important, it is critically important that credit unions submit comments on the proposed rule to the Federal Reserve. For more information on the proposal and how to comment, visit the LSCU MBL and Interchange Resource area.