The Nebraska Credit Union League (League) joined the Nebraska Bankers Association (NBA) and the Nebraska Independent Community Bankers (NICB) in a letter to Kansas City Federal Reserve President/CEO Jeff Schmid expressing opposition to the Federal Reserve System’s proposal to tighten debit card caps in Regulation II.
The Federal Reserve’s proposal would reduce the base component of the interchange fee cap to 14.4 cents from 21 cents; reduce the ad valorem to 4.0 bp from 5.0 bp; and adjust the fraud prevention adjustment to 1.3 cents from 1 cent. It would update these components every other year. Financial institutions below $10 billion would be “exempt” but America’s Credit Unions as well as other banking trades have indicated that the exemption has not and would not be effective for financial institutions below $10 billion in assets. America’s Credit Unions have studied the impact of the debit interchange law that went into effect a decade ago and found that the exemption for financial institutions below $10 billion was ineffective and reduced debit interchange income for all financial institutions while providing little to no savings for consumers as promised when the law was passed.
In the letter, the trades indicated that reduced Price Caps will result in added costs to consumers. “The proposed rule will result in many banks and credit unions having to increase consumer fees for checking accounts.” The letter encouraged President Schmid to contact the Federal Reserve Board of Governors to request that they withdraw the proposed rule.
