Credit unions face a $1.5 billion annual price tag if the debit interchange fee regulation goes into effect, Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, said Friday.
She addressed top issues facing the credit union movement during the 18th Annual CUNA Marketing & Business Development Council Conference in Las Vegas.
At issue is Section 1075 of the Dodd-Frank Act, the Interchange Amendment, which lacks any enforcement mechanism to protect small issuers such as credit unions. “We’re exempt, but there are no rules to protect us,” Dykstra noted. “We can’t afford to take a $1.5 billion hit.”
She said credit unions should budget to receive 30% less in interchange income this year, and 70% less six to 12 months after the interchange legislation’s implementation. Magnifying the impact of potential cuts to interchange income are insurance fund assessments and declining revenues due to the economic slowdown.
“Marketing is hit the hardest by budget cuts during tough times,” Dykstra said. She called upon conference attendees to contact elected officials about this issue, and to encourage friends and colleagues to do the same.
Other top issues facing credit unions:
• Member business lending legislation. Dykstra acknowledged that although many credit unions don’t offer business services, the legislation is important to the movement as a whole.
“We need an environment where all credit unions can thrive,” she said. “And, business lending might be important for your credit union five years from now.”
• Supplemental capital. Too many credit unions are dealing with capital constraints by shrinking their assets. “That’s not acceptable,” Dykstra said.
• Deficits. Cash-strapped states and the national government are looking everywhere for income, which requires constant vigilance about protecting the credit union tax exemption.
“We don’t think the government will set out to tax credit unions,” Dykstra noted, but the movement needs to watch for last-minute amendments tagged onto other legislation. “It could be the Durbin Amendment all over again.”