Monday, March 07, 2011 11:22:00 AM
WASHINGTON - A plan that would exempt credit unions and other financial institutions from the Fed's planned interchange fee regulation changes would not work in practice, and "needs to be fixed," FDIC Chairman Sheila Bair said in a recent appearance on CNBC's The Kudlow Report.
When questioned by Kudlow, Bair said that she "would be fine" with allowing the market to determine the amount of interchange fees. Bair added that it makes her nervous "when the government tries to start doing rate regulation and charging fees."
The FDIC Chair added that there appears to be "a movement afoot" to delay interchange implementation.
Bair in testimony delivered before the Senate Banking Committee last month speculated that the interchange changes could harm small financial institutions far more than they would help merchants, and a number of regulators and legislators have also noted that the proposed $10 billion exemption is unlikely to protect small issuers as intended.
CUNA President/CEO Bill Cheney last week called for the Fed to stop, study and start over on interchange fee regulations and encouraged members of Congress to strike a legislative remedy that will ensure a meaningful interchange fee carve-out.
Rep. Debbie Wasserman Schultz (D-Fla.) repeated the call for delay during CUNA's Governmental Affairs Conference (GAC) last week.
The interchange fee regulations, which could limit the amount of interchange fees charged per purchase to as little as 7 cents, are currently set to come into effect in July.
The Bair interview is available for viewing at: http://www.cnbc.com/id/15840232/?video=3000007937&play=1