Friday, February 04, 2011 9:43:00 AM
WASHINGTON - CUNA President/CEO Bill Cheney during a Thursday appearance on Bloomberg Radio's Taking Stock with Pimm Fox urged the Federal Reserve to stop and study the new interchange law, rather than forging ahead with new rules, so that everybody wins - consumers, merchants, and financial institutions.
The Fed should be given the time needed to consider all interchange related costs, and set a reasonable interchange rate to avoid "unintended consequences," Cheney said. These unintended consequences could include the elimination of debit card programs by credit unions or the addition of new fees that would be imposed on credit union members in order to keep the programs.
The Federal Reserve's interchange proposal would place an arbitrary cap, perhaps as low as 7 cents, on interchange fees. Cheney challenged retailer claims that any savings gained from this interchange fee cap would be passed on to consumers.
The promise and progress of credit union member business lending legislation was also addressed during Cheney's Thursday appearance. Prompted by one show host's observation that big banks have recently been reluctant to lend to small businesses, Cheney noted that credit unions are waiting to do more to help the economy, and could do so if the cap is raised. Cheney also confirmed one host's suspicions that fear of competition is the sole motive behind banker opposition to the MBL cap lift.
The hosts noted Federal Reserve Chairman Ben Bernanke's Thursday statement that more jobs would be needed if the economic recovery is to be sustained, and Cheney said that that employment gap could also be filled once the MBL increase is passed into law.
Listen to the full interview by clicking here. To listen to a short sound byte of Cheney's interview, click here.