The Independent Community Bankers of America and the Credit Union National Association have once again joined forces to oppose Sen. Richard Durbin's interchange amendment in the Senate regulatory reform bill, arguing the provision should not be part of the final legislation.
The two trade groups sent a joint letter to all members of Congress on Thursday decrying Durbin's provision as a price-fixing measure that would hurt consumers. Although the provision ostensibly would exempt smaller institutions, both groups said it would still have an impact.
"Despite what appears to be a 'carve-out' the Senate amendment would not shield small issuers or the consumers they serve from the harsh consequences of government price controls," wrote Cam Fine, the president of the ICBA, and Dan Mica, the president of the CUNA. "The bottom line is this: A coalition of large merchants is seeking to reduce overhead costs by shifting the responsibility for the payments system entirely onto the issuers, and ultimately, consumers."
They urged members to reject the provision. "Community banks and credit unions ask all members of the House and all members of the conference committee on … [regulatory reform] to oppose the price-fixing and anticonsumer interchange language adopted by the Senate," they wrote. "Interchange rates had nothing to do with the financial crisis and are outside the scope of this bill."
The letter comes as Durbin has launched his own campaign to urge conferees to preserve his provision. The Illinois Democrat issued a press release Thursday claiming that MasterCard and Visa are misrepresenting his amendment and have scared small institutions into opposing it.
"It appears that in an effort to frighten small banks and credit unions into opposing the amendment, your companies are threatening to make changes to your small-bank interchange fee rates and to your network operating rules," Durbin wrote in a letter to the heads of Visa and MasterCard. "These changes, which are not in any way required by the amendment, are unnecessary and would disadvantage small card-issuing institutions. … The simple fact is that small banks would not be harmed or punished under the amendment unless your companies decide to harm or punish them."
Durbin added: "I warn you that if your companies coordinate with each other or with your largest member banks to make changes to your fees and rules, it would raise serious concerns that you are engaging in an unlawful restraint of trade," he said. "I urge you to commit that if this amendment becomes law, you will not take purposefully steps to disadvantage small issuers."