WASHINGTON-The U.S. Senate turned away the concerns of community banks, credit unions and the vast majority of Republican members last week to vote final passage of the financial reform bill, sending the measure on for President Obama to sign into law.
The final vote was 60 to 39, with two Republicans joining the Democrats in approving the bill and the remaining 39 Republicans voting against. The Senate has only 99 sitting members due to last month's death of Democrat Robert Byrd of West Virginia.
The bill, drafted in response to the biggest financial crisis since the Great Depression, would set new guidelines for the trading of financial derivatives, create a systemic risk oversight scheme for huge financial institutions, introduce a consumer financial protection agency and set new standards for Wall Street rating agencies. The credit union lobby, which helped to shape many of the provisions of the bill to minimize their impact on credit unions, remained opposed to the bill at the end because of the interchange amendment which will establish the Federal Reserve as regulator of fees charged on debit card transactions.
CU Lobby Bemoans Interchange Amendment
"The bill's interchange fee amendment will ultimately harm consumers while enriching the big retailers," said NAFCU President Fred Becker. "Contrary to popular belief, consumers will pay more for products and services because of this legislation. Credit unions will be severely disadvantaged in a marketplace tilted toward bigger players as they struggle to offer products and services to their members at competitive rates and with low fees.
"The bill," said CUNA President Bill Cheney, "would have been well-balanced, but for the interchange provision it also incorporates. Because of this provision's impact on credit unions, and its inclusion in the bill, CUNA had no choice but to oppose the overall legislation."
The CUNA chief said the credit union lobby's focus now switches to the rulemaking process on the various provisions, particularly the interchange amendment. "Now that it has passed the Senate, and seems certain to become law, credit unions will be working with regulators to ease the interchange provision's impact on their operations and members," he said.
The interchange amendment will direct the Fed to study interchange fees charged by the nation's biggest card issuers, those over $10 billion in assets, and order they be reduced if found to be unfair. While all but three credit unions would be exempt from the provision, credit union representatives assert they will be unwittingly drawn in anyway because they will be forced to lower their own interchange fees in order to compete with big banks if the big banks are ordered to reduce their fees.
The interchange amendment also allow retailers to encourage consumers to use cash or lower-cost cards for transactions, something the two dominant card networks, Visa and MasterCard, currently prohibit by threat of fines.
