Friday, February 18, 2011 12:21:00 PM
WASHINGTON - Potential problems with the small issuer exemption under Dodd-Frank and the Fed's proposed interchange fee regulations took center stage Thursday during separate Senate and House hearings with key regulators acknowledging that the small-issuer exemption may prove ineffective.
Fed Chairman Ben Bernanke said during testimony before the Senate Banking Committee that the exemption may not be effective in the marketplace. FDIC Chairman Sheila Bair shared many of Bernanke's views, and speculated that the changes could harm small financial institutions far more than they would help merchants.
Across Capitol Hill, several House lawmakers called for the Fed to delay any action on interchange during a Subcommittee on Financial Institutions & Consumer Credit hearing. Fed governor Sarah Bloom Raskin noted that interchange provisions of the Dodd-Frank Act were difficult to interpret and testified that the Fed would delay its rulemaking process if directed to do so by Congress.
The hearing also featured the testimony of Allied CU of Stockton, Calif., President/CEO Frank Michael. Michael, appearing on behalf of both his credit union and CUNA, reiterated CUNA's urging for Congress to stop the implementation of the interchange standards and study the potential impact that the changes would have on credit unions and consumers. Congress could then restart the process of writing these potential regulations, Michael said.
CUNA President/CEO Bill Cheney said that CUNA was encouraged by the tenor of the hearing, and added that with the combined comments of key legislators, regulators will increase pressure on Congress and the Fed to rethink the issue.
The Fed proposal remains open for public comment until February 22. Credit union professionals, volunteers, and members are urged to visit NJCUL's Online Grassroots Action Center where they can easily send the Fed a pre-drafted email to weigh-in on this important issue.
NJCUL's Online Grassroots Action Center can be accessed at: http://www.capwiz.com/cuna/nj/home/
Video archives of the two hearings are available at: http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.LiveStream&Hearing_id=c43953db-0fd7-43c3-b6b8-97e2d0da3ef7 and http://www.cuna.org/cgi-php/offlink.php?nnlink_id=38016