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Seal of the Board of Governors of the United States Federal Reserve System. This version of the seal mostly dates from 1935.

Deadline Coming: Lawmakers Can Sign-On to Joint Letter to Fed

Please take action on the Federal Reserve Board’s (FRB) proposed rule that would significantly reduce the debit interchange fee cap (see “Protect the Future of Debit Card Interchange Rates” here).

The FRB’s proposed rule would further impact non-interest income at credit unions after the Durbin Interchange Amendment was implemented through regulatory action in 2011.

The California and Nevada Credit Union Leagues’ ongoing FRB/Regulation II Connect For The Cause alert asks legislators in Congress to oppose the Fed’s proposed debit interchange rule. Legislators can take action by joining a letter to the Federal Reserve circulated by Reps. Blaine Luetkemeyer (R-MO) and Nikema Williams (D-GA). The deadline for congressional lawmakers to join the letter is March 5.

The Leagues are asking that all credit union leaders reach out to their members of Congress to garner support for this initiative!

Asking the Federal Reserve to ‘Stop and Study’
Within this letter, members of Congress will address the Fed regarding the impact of Regulation II on low-income communities in Luetkemeyer and Williams’ districts (the co-legislator deadline to sign-on has been moved from March 1 to noon on March 5). The letter is scheduled to be sent on March 5 because this date corresponds to an upcoming House Financial Services Committee hearing with Fed Chair Jerome Powell on March 6.

As currently drafted, this “dear colleague” letter states: The “Secure Payments Act” from Rep. Luetkemeyer is set to be introduced next week (possibly the week of March 3rd if the bill edits take longer than expected). This would be a “Stop and Study” bill that would stop continued work on the proposed Reg II rule and require the Fed to study the impact of the rule on products offered to low-income communities and the impact of the rule on small financial institutions. It will be a bipartisan bill, and they are speaking with an HFSC Democrat now to join on. The ask would be for co-sponsorship of the bill.

For credit union leaders attending the upcoming Governmental Affairs Conference (GAC) in Washington, D.C. from March 3 – 7: if you have any Capitol Hill legislator meetings before March 5 at noon, this would make a good “ask” to have your district offices sign this letter. Simultaneously, please feel free to ask your congressional district offices this week or next week to sign it so the Leagues can gather as many legislator names as possible before GAC.

If members of Congress miss the March 5 deadline, they can eventually co-sponsor the Secure Payments Act, which will be introduced by Luetkemeyer in the coming weeks.

Proposed Rule is Flawed and Would Harm CUs
While the FRB’s proposal exempts financial institutions with less than $10 billion in assets, the 2011 Durbin Amendment’s “exemption” of smaller financial institutions has proven to be largely illusory, as the regulatory thresholds in the interchange market do not insulate smaller issuers from harm.

America’s Credit Unions and the American Association of Credit Union Leagues (AACUL) released a study that shows mandated interchange caps negatively impact local and community financial institutions such as credit unions.

The Leagues and ACU know the proposed rule is seriously flawed and will cause significant harm to credit unions and their members, which is why solid data is important to create a full picture of credit unions’ experience. Since the proposal was developed based on data collected from financial institutions with $10 billion or more in assets, ACU will need to illustrate why the proposed rule would have major ramifications on the industry and hurt credit union members.

If you have questions related to this initiative, please email Leagues Vice President of Regulatory Advocacy and Compliance Lisa Quaranta or Senior Vice President of Federal Government Affairs Stephanie Cuevas.

Thank you in advance for your participation!

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