Despite intense opposition by credit unions and banks, the House today approved a comprehensive financial overhaul bill by a vote of 237-192.
CUNA, NAFCU and the banks launched a strong campaign against the measure, mostly because it contains an amendment that authorizes the Federal Reserve to ensure that debit card interchange fees are "reasonable and proportional," in relation to processing costs. It excludes credit unions and community banks with assets of less than $10 billion. It also allows merchants to set a minimum or maximum amount for each transaction and permits them to offer additional discounts for using a certain type of card or cash.
During Wednesday's debate, House Financial Services Committee Chairman Barney Frank (D-Mass.) said the measure has provisions that will protect small banks and credit unions from having their debit cards being discriminated against by merchants. He said lawmakers would ensure that the Fed writes regulates that spells out those provisions.
The bill creates a Consumer Financial Protection Bureau housed in the Fed to regulate consumer financial products. Credit unions would have to comply with the bureau's rules but the enforcement for credit unions with assets of $10 billion or less would be done by the NCUA.
The measure also permanently raises the deposit amount covered by the NCUSIF to $250,000 and includes the chairman of the NCUA on the council of regulators empowered to determine what constitutes a systemic risk and to review certain rules of the CFPB.
The House vote was mostly along party lines, with all but 19 Democrats supporting it and all but three Republicans opposing it.
CUNA and NAFCU both expressed disappointment with the vote. NAFCU President/CEO Fred Becker said, "While we recognize the need to reform the financial system to rein in bad actors, we are disappointed that the House approved the Conference Report to H.R. 4173 with an extraneous provision to set price controls on debit interchange. This issue had nothing to do with the financial crisis and will only make big box retailers richer at the expense of credit unions and their 92 million members."
"What could have been a landmark piece of legislation is marred, for us, by the interchange provision, which forced us to oppose this bill. Absent interchange, we felt the bill was fairly well balanced. But with interchange we will continue to oppose in the Senate, urging them to remove or significantly alter the interchange section," said CUNA President/CEO Dan Mica.
The Senate is expected to vote on the bill the second week of July.
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