WASHINGTON-The credit union lobby was fighting new threats last week as the Senate debated the bank reform bill, including an expanded effort to lower credit card interchange fees.
"We're on high alert to guard against interchange restrictions," said John Magill, chief lobbyist for CUNA, noting that a powerful coalition of merchants and retailing groups are pushing for the interchange initiative.
Late last week, Illinois Sen. Richard Durbin expanded his efforts to open the interchange market, currently dominated by the bank- and credit union-controlled Visa and MasterCard networks, to greater competition and lower fees paid be merchants to the two networks.
Durbin's amendments would allow merchants to offer discounts to consumers who use cash, debit or a particular card network, like a MasterCard instead of a Visa, a practice currently barred by the two major cards networks. Another would allow merchants to set minimum and maximum purchase limits-something major card issuers don't allow and threaten to fine businesses that set them.
Debate on the bill is expected to continue into this week before a final vote later in the week.
The credit union lobby, which is steadily opposed Durbin's entreaties on interchange as another assault on a key revenue source, balked even at the Senator's proposal to exempt almost all credit unions and banks, those institutions under $10 billion, from his amendments.
CUNA joined the Independent Community Bankers Association in urging Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell for defeat of the Durbin amendments, even with the carve-out language. "Let's be clear: interchange is not a "big bank" issue," said CUNA President Dan Mica and ICBA President Camden Fine in a letter to the Senate leaders. "The fact is, interchange revenue-and the network rules supporting the electronic payments system-is vastly more important to small issuers, which rely on this income and structure to meet their customers' and members' needs and product expectations."
NAFCU, part of an Electronic Payments Coalition with CUNA, the bankers and Visa and MasterCard, joined other lobby groups in opposing the interchange amendments, including the Latino Coalition, Minority Business Roundtable, the League of Rural Voters and the National Coalition of Latino Clergy and Christian Leaders, who asserted in a joint letter to Senate leaders the proposals "could mortally wound community banks and credit unions, reduce access to capital for small businesses, and further burden working families struggling to make ends meet."
By the end of last week, the 1,400-page bill was becoming what is known on Capitol Hill as a "Christmas Tree" bill with presents for everybody.
NAFCU was working to convince Senate leaders to include the member business loan provision which would raise the current cap on MBLs that has stalled in Congress for several years.
NAFCU also succeeded in getting sponsorship of an amendment that would exempt all credit unions under $10 billion in assets from the proposed consumer financial protection bureau and leave those duties to NCUA. While provisions of the bill already exempt those credit unions from examinations by the proposed consumer bureau located inside the Federal Reserve, the proposed amendment would also exempt credit unions from all rulemaking and enforcement actions.
CUNA and NAFCU succeeded in getting an amendment to the bill that would give NCUA a seat on a panel overseeing a Financial Stability Oversight Council that would oversee appeals of decisions by the proposed consumer financial protection agency.
The credit union lobby was also working with the bankers on a bid to make permanent the temporary increase in federal deposit insurance coverage to $250,000 per account, which is scheduled to expire in 2013.
Early in the debate, the credit union lobbyists succeeded in getting an amendment to the bill that scrapped a provision that would have required credit unions and banks to report comprehensive data for all deposits to their regulator.
"NAFCU continues to have some success in getting amendments looked at, as well as playing aggressive defense on some hostile ones that are popping up," said Dan Berger, chief lobbyist for the group.
Debate on the bill, which would create a consumer financial protection agency, set new oversight of too-big-to-fail financial firms and regulate derivatives, shifted briefly last week to resolution of Fannie Mae and Freddie Mac, with Republican senators arguing the troubled secondary mortgage market giants should be included in the too-big-to-fail scheme. Their effort to do that failed as Democrat leaders insisted they wanted to wait until the mortgage market has stabilized before tackling that issue.
Senate Banking Committee Chairman Chris Dodd of Connecticut cited support from NAFCU, the realtors and home builders when he said the housing markets are not ready yet to do without the major intervention provided by the two secondary mortgage market giants. Dodd, who is managing the floor debate on the bank bill, said it would be "reckless" to pull the plug on Fannie and Freddie without some kind of alternative housing finance structure in place.
