Washington Watch

Register now

SEN. REID PLANS TO HOLD VOTE ON BILL TO DELAY DEBIT RULE

WASHINGTON-Senate Majority Leader Harry Reid plans to hold a vote on a proposal to delay the cap on debit fees, even as the Senate leader says he is opposed to the delay.

Reid's office confirmed the Senate will give backers of the delay a vote on their bill, which will need a 60-vote majority to pass because of plans by Sen. Richard Durbin, the sponsor of the debit rule, to filibuster the delay.

Reid voted for Durbin's amendment that was part of last year's Wall Street reform bill.

It's not clear when the Senate will vote on the delay, but it is expected to be before the July 21 implementation deadline for the debit rule.

 

NCUA OPENS DOOR FOR MUTUAL FUND FOR MBLS

ALEXANDRIA, Va.-NCUA said federal credit unions may sell their loans to a registered mutual fund that organizers are hoping will form the basis of a new secondary market for credit unions.

The legal opinion clears credit unions to sell their member business loans to the unformed fund, as part of the project, according to Guy Messick, a Philadelphia attorney who is working to create the fund.

The big question NCUA must still answer is whether credit unions may also invest in such a fund, noted Messick. "We have built the car, we're just waiting for NCUA to give us the engine," he told the Credit Union Journal.

The MBL fund would be modeled after similar funds planned by CUNA Mutual. NCUA approved the insurer's MBL fund as a pilot program, but CUNA Mutual abandoned the project, which was to also have included a mortgage fund, a small business loan fund and others, amid the decline in the economy.

Messick, one of the pioneers in CUSOs, sees the MBL fund as a secondary market conduit for credit union assets, giving credit unions both an outlet to sell assets and to invest in credit union assets at the same time. Such an option could serve as an alternative to the troubled secondary mortgage giants Fannie Mae and Freddie Mac by creating a new secondary market for credit union mortgages, he explained. Messick is hoping NCUA will approve credit unions' investment in such funds as it rewrites its investment rule 703, expected later this year.

 

ANTITRUST SUIT PUNCHES UP CONTACTLESS PAYMENTS MKT

The Department of Justice filed an antitrust suit to stop Verifone from acquiring Hypercom because it would eliminate one of only three competitors in the manufacture of point-of-sale payments terminals.

The new antitrust suit prompted ViVotech, the pioneer in contactless payment technology, to renew its bid to acquire Hypercom's U.S. Assets, which would help it expand its presence in the growing market for Near Field Communication, or contactless, POS terminals.

In its suit, the Justice Department said Verifone's plans to divest itself of the Hypercom assets by selling them to France's Ingenico to facilitate antitrust clearance is not adequate because Verifone would still control the Hypercom assets via a licensing agreement with Ingenico. DoJ said the proposed deal would substantially reduce competition, resulting in higher prices and reduced innovation, quality, product variety, and service.

Verifone owns a 48% share of the U.S. POS market, Ingenico an 18% share and Hypercom a 26% share-or 92% of the market between the three of them, according to Justice. The proposed deal would result in Verifone and Ingenico becoming a "cooperative duopoly" in full control of the sale of POS devices in the U.S., the suit asserts.

"The combination of Verifone and Hypercom would likely lead to retailers paying higher prices for POS terminals," said Christine Varney, assistant attorney general in charge of the Justice Department's Antitrust Division. "The proposed divestiture does not resolve the significant competitive concerns posed by the merger, and in some ways exacerbates them."

ViVotech said its purchase of the Hypercom assets would satisfy the antitrust concerns. "We still see the acquisition of Hypercom's U.S. assets as a strategic and transformative opportunity for our company to enhance next-generation NFC platforms, and accelerate the adoption of in-store mobile payment, loyalty, marketing and merchandising solutions in the U.S.," said Mike Mullagh, CEO of ViVotech. "We are also the company that is in the best position to support and provide continuity to Hypercom's customers and to become a strong, viable third competitor maintaining a highly competitive market."

In November, Verifone agreed to purchase Hypercom for $485 million. To satisfy antitrust concerns, the companies said in April that Hypercom's U.S. operations would be sold to Ingenico, the largest provider of POS terminals worldwide, for $54 million.

But the agreement between Verifone, Hypercom, and Ingenico, according to the antitrust suit, is not a bona fide sale of a stand-alone Hypercom U.S. business. Rather, it is a complex licensing agreement with which Ingenico would essentially become a Hypercom franchisee of the combined Verifone and Hypercom, with the exclusive right to sell Hypercom POS terminals in the U.S. for five years.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER