The Senate on Wednesday rejected an amendment from Sens. Jon Tester, D-Mont., and Bob Corker, R-Tenn., that would have delayed implementation of the Federal Reserve’s debit card interchange fee cap.
Credit unions won the majority of votes—54 in favor and 45 against—when the Senate weighed in on the amendment to cause a delay in, and require an impact study of, the interchange cap and the small-issuer exemption. To pass, the amendment needed a total of 60 votes in favor, however.
“We’re deeply disappointed the Senate disregarded the more than half a million contacts made by credit unions and their members over the last three months in failing to pass the Tester-Corker amendment,” says CUNA President/CEO Bill Cheney. “The Senate’s reluctance to act is going to create a train wreck that will affect every consumer with a debit card.”
CUNA has worked intently for months on the legislative and regulatory fronts in an effort to improve the interchange rules, make the “carve out” for smaller institutions truly effective, and prevent credit unions and their members from being hurt by these measures, Cheney says. “CUNA has emphasized repeatedly that the interchange rules the Fed has proposed, unless significant changes are made, will impose a severe hardship on credit unions with debit card programs, draining the revenue they need to offset the costs of providing card services.”
Much as they would prefer not to, credit unions will have no recourse but to make up these costs by imposing new fees or service restrictions on their members, Cheney points out. “How are consumers better off under this scenario? The plain fact is they are not. We commend Sens. Tester and Corker for their valiant efforts. But, since their amendment did not pass, we will continue pressing the Federal Reserve to improve the proposed regulations in order to minimize to the extent possible the negative effects on credit unions and their members. But the Fed can only do so much under the constraints of the law.
“We’re also involved in litigation to challenge the law and rule in an endeavor to preserve the revenue credit unions need to offer debit card services," Cheney continues. “But with today’s vote, the Senate missed a huge opportunity to get this right by opting not to give interchange the additional study it so badly needs and failed to receive before it was enacted.”
CUNA and credit unions will continue pressing the Fed to improve the proposed rule to minimize negative effects on credit unions and their members, he says.