Federal Reserve Chairman Ben Bernanke told lawmakers today that the central bank won't be able to make the April 21 deadline for releasing a final rule to regulate interchange fees.
He cited the large volume of comments–11,000 letters–and questions raised about the impact of the proposed rule as reasons why the Fed won't make the deadline. But he did say that they plan to issue a rule before the July 21 deadline for when the rule is to take effect.
He wrote leaders of the Senate Banking and House Financial Services committees that the Fed is "reviewing these comments and the issues they raise very carefully," and because of that they will miss the deadline.
"This extraordinary volume of comments reflects the importance of debit cards as a method for consumers and others to access deposit accounts to make payments for purchase throughout the economy," Bernanke wrote.
CUNA President/CEO Bill Cheney said in a statement that Bernanke's announcement is "is further proof that Congress must take action now to postpone this entire matter. We remain deeply troubled overall by the impact of the statute itself, and will continue to urge Congress to adopt legislation to delay the overall implementation date of July 21 and carefully study the impact of the debit interchange provision, particularly on credit unions and their members."
NAFCU has been working towards the same goal and Brad Thaler, the association's vice president for legislative affairs, expressed concern that if there is no delay it will cause problems for credit unions.
"Congress should delay the implementation because it is a complex issue and would have far reaching implications," he said. "If there is no delay it will give credit unions little time to make the adjustments needed to comply with the rule."
According to the proposed rule, the allowable costs for interchange would be limited to no more than the issuer's allowable costs divided by the number of electronic debit transactions on which the issuer received or charged an interchange transaction fee in the calendar year. Or the issuer could receive debit interchange capped at 12 cents per transaction.
According to the provisions of the financial overhaul passed by Congress last year, the final rule must be approved by April 21 and in effect by July 21. Bills have been introduced in the House and Senate to delay the implementation of the proposed rule, which was mandated by an amendment sponsored by Senate Majority Whip Richard Durbin (D-Ill.) to last year's financial overhaul bill.
To read the Senate bill, S. 575 or the House bill, H.R 1081, go to: http://thomas.loc.gov
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