By any measure, the struggle over the new law on debit interchange has been titanic, and the numbers reflect it:
- Credit unions and their members will help foot the bill of a $15 billion-plus windfall that merchants will realize from the law, according to our view;
- By retailers’ own admission, the new law will save them “an estimated $14 billion a year—more than $1 billion a month …”;
- Retailers claim they represent the interests of 1.5 million merchants nationwide; and
- The law will directly affect many of the 93 million credit union members.
And so it goes.
Credit unions rely on interchange revenue to ensure they have debit card programs to offer to members, a must in our modern payments system. They’ve made it clear that the Federal Reserve’s proposed rules implementing the law won’t ensure they can continue offering efficient debit card programs.
So, when the Senate last month failed to take action that would effectively order the Fed to “stop, study, and start over” on its rules, we were greatly disappointed.
But we took some consolation from a number of developments related to the Senate’s vote. These developments might very well help us make the case to the Fed about the impact of its rules on credit unions. Among them:
- The Senate failed to take action, but a majority of senators (54) sided with us in voting for the legislation to “stop, study, and start over.” Unfortunately, at this stage of the Senate’s history, its rules require that any legislation must gain 60 or more votes to move forward. Had this been another time, we may very well have prevailed.
- The fact that a majority of senators agreed with us is telling—and something we’ve been pointing out to the Fed. (As this column goes to press, the Fed was still considering its final rules. The interchange law goes into effect, with or without rules, on July 21.)
- Credit unions have been loud and clear on this issue. They have made more than a half million contacts (in just three months’ time!) with members of Congress in support of “stop, study, and start over.” Those numbers should not be ignored.
- By no coincidence, the outpouring by credit unions and other financials (including community banks) pushed many senators to our point of view. In 2010, when the Senate first adopted the interchange amendment (without benefit of a hearing, by the way), 33 senators opposed it. When our “stop, study, and start over” bill came to the floor last month, 54 senators stood with us (effectively opposing it). Among them were a dozen senators who had supported the interchange amendment a year ago.
Buttressed by these numbers, we’ve been working to help the Fed understand that its final rules must go as far as possible to protect credit unions and other small issuers from the law’s major impact.
None of this happened in a vacuum. During the past six months, CUNA and the leagues—working with our member credit unions—have vigorously pushed this issue by:
- Generating about 75% of all e-mails, faxes, phone calls, and letters to members of Congress from credit unions;
- Coordinating advertising (sponsored by our partners, the Electronic Payments Coalition) in a dozen states, urging support for “stop, study, and start over”;
- Participating in countless editorial board meetings across the U.S. and interviews with the national press;
- Organizing conference calls, group conferences, and face-to-face meetings with dozens of members of Congress;
- Arranging participation in Hike the Hills, fly-ins, and town meetings between credit unions and lawmakers; and
- Meeting with hundreds of policy makers, regulators, legal experts, and political and media consultants to find ways to move the needle on this issue.
Our ultimate goal is to protect credit unions’ ability to continue offering members affordable, effective, and efficient financial products, such as debit cards.
We’ll keep at it; our number isn’t up yet.
BILL CHENEY is CUNA’s president/CEO.