The Federal Reserve’s proposal to cap debit interchange fees at 12 cents per transaction has credit union CEOs facing larger issues than just how their own organizations may take the blow.

“If the proposed rule goes into effect with the pay-per-transaction cap, it will certainly be a significant impact on our non-interest income stream,” said Scott Wilson, CEO of $400-million SeaCom FCU here. “I am concerned how this will adversely affect already teetering credit unions that have been bombarded with all of the new imposed regulations over that past year, as well as the long-term corporate stabilization and special NCUSIF premiums.”

Factor in fewer opportunities for loans, increased share growth, lower-yielding investment prospects and margins, and ROA gets smaller, Wilson noted. “And then, in turn, are reduced retained earnings, which obviously impacts capital. All in all, it complicates even further an extremely volatile situation propelled by the corporate system and an adversely impacted insurance fund.”

San Francisco FCU’s Steven Stapp has paid close attention to the Fed’s new interchange proposal and believes it could result in a reduction of services to members. “This will be very bad for the industry,” said the CEO of the $750-million CU based in San Francisco. “Especially those credit unions that rely on fee income or have debit rewards programs, as they will need to eliminate these services.”

In Arvada, Colo., Sundie Seefried, CEO of $210-million Eagle Legacy FCU, hopes credit union trade associations improve their legislative batting averages. “I hope our leadership can lead and secure a few legislative wins in the future. The reduction of income from the last two losses, in addition to NCUA assessments, will make paying association dues even more difficult for many credit unions, let alone meeting member needs.”

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