Lawmakers will return from their week-long Memorial Day recess this week right in the middle of a human scrum – hundreds of credit union executives crossing hundreds of retailers arguing over a key provision in the bank reform bill that would introduce government oversight of the market for cards interchange.
The focus of bank bill was changed in the Senate to, among other things, the addition of the interchange provisions. Now credit union and bank executives hope to convince House leaders – who never voted on the measure before sending the bill to the Senate – will be convinced to knock it out of a combined version of the House and Senate bills.
“There’s a lot of agreement on both sides of the House that this is not a proper vehicle for interchange,” said John Magill, chief lobbyists for CUNA, which is organizing a fly-in for hundreds of credit union executives to lobby Capitol Hill this week. Magill noted that the House has been discussing a different interchange bill but has never voted it and has not even debated the interchange provision added to the Senate bill before final passage.
The Senate provision would have the Federal Reserve study interchange fees charged by the biggest banks on debit transactions to determine if they are fair, and to direct that fees be rolled back if they are not deemed fair. Even with an exemption for credit unions and banks under $10 billion, the credit union lobby says the provision will cause havoc in the market and result in their cards being less attractive to consumers.
The Senate provision will also bar Visa and MasterCard from prohibiting retailers from offering discounts for the use of cash; and from encouraging shoppers to use cards with lower fees. Under Visa and MasterCard bylaws retailers are barred from offering such inducements and can be fined for those practices.
In traversing the halls of Congress this week the credit union executives will cross paths with representatives of the National Association of Convenience Stores, National Retail Federation, National Restaurant Association, Petroleum Marketers Association of America, National Association of Chain Drug Stores, National Association of Theatre Owners and several other powerful lobby groups who are working to keep the interchange provision in the final bank bill.
Credit union executives hope to convince leaders of the House and Senate, who are poised to begin a conference to merge their two bank bills, to knock the language out of the final bill. They will know more over the next few days after Democratic House leaders poll their members on support for a variety of provisions in the Senate’s bank bill to guide them in the negotiations.
“This is a minute-by-minute thing,” said NAFCU President Fred Becker, whose group is also working to convince members of the Senate to reconsider their vote for the interchange provision. He said he was cheered by news that state governments have expressed concern on that the interchange provision could mean to various public assistance programs that are offered with debit cards, instead of by check now.
The congressional leaders will also haggle over several other major provisions of the separate bank bills that would regulate financial derivatives; set limits on proprietary trading for banks and create a consumer financial protection agency.
Leaders in the House and Senate said they hope to complete work on the bank bill by the congressional July 4 recess, an unusually short work schedule with which to combine two separate, 1,500-page bills.