WASHINGTON – Hundreds of credit union executives criss-crossed the halls of Congress yesterday in an effort to convince lawmakers to scrap the provision of the bank reform bill that would establish price controls over debit card interchange, but their efforts face great odds.
“I think we all know that this stays in the bill unless we see a mini-riot by credit unions and community banks that will be most affected by this,” said Buddy Gill, political director for the Texas CU League, who was accompanying a delegation of credit union executives on their rounds yesterday.
He was referring to a Senate version of the bank bill, which includes the interchange provision and is expected to serve as the main vehicle, as congressional leaders begin work this week to merge the Senate version with the House bill, which does not include the provision. In fact, members of the Senate, which approved the interchange amendment on a 64-33 vote, are widely expected to argue for retention of the controversial amendment. “I think some form of the amendment will survive the final bill,” Sen. Thomas Carper, D-Del., told Credit Union Journal this week.
But there still is uncertainty in the House, which never voted on an interchange provision because it lacked enough support. Rep. Luis Gutierrez, D-Ill., a key member of the House Financial Services Committee who will serve in the conference working to merge the two bills, said support for the provision is still questionable. “We’ll know more tomorrow,” he said, referring to an expected caucus of House Democrats to discuss the various provisions of the separate bills.
Credit union executives said there is widespread confusion over the effects of the interchange provision, especially an exemption for almost all credit unions from price-setting authority by the Federal Reserve, which would be authorized to order a roll-back in debit card fees charged by institutions over $10 billion if they are determined to be excessive.
“We’re thinking that the carve-out provision is a fiction,” said Charles Emmer, president of Colorado Springs-based Ent FCU. “It’s not going to give us any help because of the nature of the card system.” He worried that enforcement of the exemption for smaller institutions will create cards with different interchange rates and accepted at different retailers. “What you’ll get is a Balkanized system, with cards accepted at certain venues.”
“The carve-out doesn’t work for us,” said Fil Sanchez, chairman of the board at AAFES FCU, in Dallas, who suggested that Fed-ordered lower fees for big banks could encourage retailers to shun credit union cards, despite provisions of the bill which would prohibit discrimination against certain cards.
“This could cause our cards to be more costly to the merchants. It can hurt credit unions and small community banks,” said Debra McCaghren, chief financial officer for Family Security CU, in Decatur, Ala.
Knowing there is broad support for the provision in the Senate, the credit union execs are hoping to convince House leaders to work to get it deleted from the final bill. “It hasn’t been vetted anywhere,” said Fred Hagerman, a vice president with San Antonio-based FirstMark FCU. “It’s got pencil marks all over it. Nobody knows how this is going to play out.”
The executives were part of a national Hike the Hill organized by CUNA, which is expected to draw as many as 1,000 representatives to Capitol Hill this week to lobby against the interchange provision.
