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Shelby, other key Senators support credit union position on interchange regulations

On Thursday, Sen. Richard Shelby (R-AL), the Ranking Minority of the Senate Banking Committee, along with 12 other Senators from both sides of the aisle including seven members of the Senate Banking Committee sent a letter to Federal Reserve Board Chairman Ben Bernake regarding implementation of the recently passed changes to debit interchange pricing. In the letter, the Senators express concern over the implementation of the debit interchange fee provisions of the recently passed Wall Street Reform Act. The Senators state that they want to ensure all costs to the issuers and economic value to the merchants are considered in the proposed rule. The point to their concern is that having the government fix prices in any venue is a bad idea, “There are any number of products that American merchants might prefer in the short term to have their suppliers prohibited from charging more than cost.”

They express concern that during the limited debate in the Senate, the amendment was presented as a pro-consumer provision, but that since passage analyst reports make no mention of benefits to consumers. Finally, they express concern that the provision will make credit union and small bank debit cards more expensive for merchants and would put smaller issuers at a disadvantage. The letter also encourages the Federal Reserve to consider all implications of any proposed rule, and exercise the discretion given to the Fed by the amendment.

As the Federal Reserve moves forward with drafting proposed rules to implement the interchange amendment, the League, CUNA and other representatives of card issuers will be working hard to ensure any regulation accounts for all costs borne by issuers. The League and CUNA will be focusing heavily on ensuring that the intended exemption of issuers under $10 billion in assets will be effective actually protect smaller issuers, and not put us at a competitive disadvantage. This letter from Sen. Shelby and other members of the Senate is very helpful in what the credit union industry will be trying to accomplish through the rule-making process. To read the letter, click here.