WASHINGTON – At least one House member is expected to introduce a bill as early as this week that would delay enactment of interchange provisions of the Dodd-Frank Financial Reform Bill, as the clock ticks toward final implementation of the rules to limit debit fees for credit unions and banks.
Credit unions and banks and the rest of their powerful Electronic Payments Coalition are hoping that hearings before the House Financial Services Committee this week and the Senate Banking Committee next week will convince Congress a quick fix is urgent before the April 21 final rule is enacted by the Federal Reserve.
“Congress is going to have to intervene. The Fed can’t stop it,” CUNA President Bill Cheney told the Credit Union Journal yesterday at the opening of CUNA’s annual Government Affairs Conference.
“This is a train wreck waiting to happen, but a train wreck that can be stopped,’ said Cheney.
The stakes in the fight are huge–with an estimated $20 billion a year in debit fees being paid to credit unions and banks from merchants. For credit unions, the stakes are even higher than for banks, with credit unions earning $2.6 billion last year in debit interchange, more than half the industry’s $4.1 billion in next income, according to CUNA.
CUNA, NAFCU and the banks–which have teamed again in this odd pairing of traditional rivals–believe that the best solution to the effort to drastically cut their debit interchange is to get Congress to agree to a two-year delay while they continue to lobby on the particulars of the Fed’s rule. In comment letters to the Fed CUNA has made the same basis request as JP Morgan Chase–for a two-year delay in implementation. (The credit unions and banks also teamed on the long-fought bankruptcy reform bill).
While a delay has won some supporters in the House, the Senate, where the interchange provision originated is much more problematic. “Don’t forget the real determinate is the Senate,” said NAFCU President Fred Becker, who said NAFCU is working closely with the payments coalition to get a bill introduced in Congress.
But most observers see an uphill fight in the Senate, where Assistant Majority Leader Dick Durbin, D-Ill., is the main champion of the interchange provisions. Durbin’s representative told the Credit Union Journal the Senator is adamant that the Fed move forward with implementation of a final rule and he sees no interest in the Senate for a delay.
