LIVONIA, Mich.-Not all state legislatures and regulators have been content to let the federal government push through new debit interchange rules established by the Durbin amendment.
Driven by efforts of the Michigan Credit Union League, both chambers of the state legislature earlier this year approved a resolution calling on the federal government to stop implementation of the new debit interchange rules.
Michigan's credit unions were among the first in the nation to convince legislators to act on a non-binding resolution to stall or halt the proposed interchange rules that are expected to reduce CU debit revenue by as much as 70%. Last year credit unions generated $2.6 billion in revenue from debit interchange, according to CUNA.
"To get the entire state legislature, both the House and Senate, to unanimously support this resolution is a very strong statement," MCUL & Affiliates CEO David Adams said. "Obviously they came to an understanding of the issues very quickly. In a state like Michigan, with our tough economic conditions, I think the state legislature said 'enough is enough. We don't need any more pressure on lenders and consumers in this state.' I have no idea if this will have the desired impact on Congress, because politics is politics. But we are doing whatever we can to make a strong statement to our Congressional delegation that the proposed debit interchange law is bad for Michigan."
The U.S. House Financial Institutions and Consumer Credit Subcommittee was expected to discuss debit interchange at its meeting last week. Two members of Michigan's Congressional delegation sit on that subcommittee, Rep. Thaddeus McCotter (R) and Rep. Bill Huizenga (R). Huizenga has said he is concerned about the effects the provision could have on consumers, MCUL reported.
MCUL is not the only league taking action against the interchange rules. The Credit Union Association of Oklahoma had a discussion with the Oklahoma Bankers Association about jointly urging its state's legislature to take make Congress aware of the negative affects the interchange rules will have on consumers and financial institutions.
The efforts of the leagues and of CU trade groups are aimed at delaying adoption of the proposed interchange rules so that the impact on small issuers could be studied. "The bottom line: consumers will pay more for financial services and the large retailers will enjoy even more profits," reminded NAFCU President Fred Becker. "The more attention we bring to the issue the better off we will be. The Fed perceived these rules would benefit consumers. That's unfortunate."
Becker said NAFCU has been working with the Fed to help the agency understand the true implications on consumers and credit unions, and is driving grassroots support. "We have encouraged our members to educate their credit union members regarding the potentially devastating impact of this issue on their wallets, many are posting information on the interchange issue on their websites."
