WASHINGTON – Even after the Senate approved a critical amendment to the bank bill on interchange fees, but before the final bill was passed last night, credit union lobbyists were already working yesterday to eliminate what they see as a punitive provision.
CUNA lobbyists met yesterday afternoon with representatives of Sen. Richard Durbin, the Illinois Democrat who sponsored the interchange amendment to see if the Senator would agree to soften the language–even as the full Senate was preparing last night’s final vote to end the three-week debate. But negotiations broke off earlier in the afternoon with no agreement to make changes in the interchange amendment, sources told The Credit Union Journal.
Passage of the Durbin amendment represented a major defeat for the credit unions and banking lobbies, especially CUNA President Dan Mica, who was probably lobbying his last major bill as CUNA CEO before passing on the reins in a little more than six weeks. Mica told CUNA members yesterday they now oppose the bank bill, which they supported up to last week, because of the interchange amendment.
With the defeat in the Senate, Mica told his members their efforts will be focused now on the House, which passed its own bank reform bill earlier this year without the interchange language in it. CUNA hopes that when representatives of the House and Senate leadership meet to reconcile the differences in the two versions of the bill they will be able to persuade the leaders to eliminate the interchange amendment. “While it is clear that our efforts going forward will now be directed at the House, please feel free to contact your Senators in the next several hours to express opposition to the legislation so long as it includes the interchange amendment,” Mica said in his communication.
NAFCU also weighed in against the bill because of the interchange language. “NAFCU will continue to work to eliminate any provision that would lead to a federal cap on interchange fees as this legislation moves forward,” NAFCU President Fred Becker said last night after the bill passed the Senate on a 59-39 vote.
Durbin, who has been working to open the interchange fee-setting process to bilateral negotiations, surprised credit union and bank lobbyists with his new bid this week that would also bar practices employed by Visa and MasterCard discouraging shoppers from using cash or a lower-cost card. Durbin’s amendment would also direct the Federal Reserve to ensure that fees on debit transactions (not credit card) are “reasonable and proportionate to the processing costs incurred.
The proposals would also bar Visa and MasterCard from penalizing retailers for offering discounts to customers for cash transactions, as the two card networks now do. Everybody expects this to result in a lowering of fees.
It would also allow retailers to offer discounts for customers to use competing card networks and for customers to pay by cash, check or debit card. They would also allow retailers to choose to decline credit cards for small dollar purchases.
