Financial Trades Play Defense on Defense Bill

Learn why credit union groups CUNA and NAFCU are part of a coalition of financial trade associations strongly opposing credit card interchange legislation.

David Baumann


Jul 18



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David Baumann

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David Baumann

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CUNA, NAFCU among coalition of groups opposing credit card interchange legislation.

As the Senate begins debate on its version of the annual defense authorization bill, financial services trade groups find themselves playing defense on credit card interchange issues.

The trade groups fear that Sen. Richard Durbin, D-Ill., will propose an amendment that would require the Federal Reserve to issue rules to ensure that large credit unions and banks that currently use the four-party card processing system be required to use at least one affiliated network in addition to Visa and Mastercard.

Durbin already has proposed a smaller amendment that would require a study of the credit card fees paid by the federal government, servicemembers and veterans who use commissaries on military installations.

He has also argued that requiring additional processors would increase competition and result in a decrease in fees paid by merchants.

Strong Pushback From Financial Services Industry

Financial trade groups disagree, contending that Durbin pushed through a similar plan for debit cards years ago. Consumers, they say, have not seen lower fees and prices as a result of the so-called “Durbin Amendment.”

“We’re playing a lot of defense,” Brad Thaler, NAFCU’s vice president of legislative affairs, told journalists in a conference call Monday.

On Friday, a coalition including NAFCU, CUNA, and the trade groups representing banks, sent a letter to congressional leaders renewing their opposition to the Durbin legislation.

The amendment, the groups wrote, is not germane to the defense bill and “it will seriously hurt consumers, community banks, and credit unions, including financial institutions that serve members of the military.”

They added that Durbin’s proposals “have been filed with the goal of enriching the largest multinational retailers and obscure payments processors and have no business being added to annual legislation designed to bolster our national defense.”

According to the trade groups, the studies in the amendment already proposed include a variety of slanted research designed to reach a foregone conclusion.

“If ever a proposed study was designed to miss the big picture, it’s this one,” the letter states.

What Happens Next?

So far, Durbin only has announced an intent to propose the study amendment. It remains to be seen if he actually pushes that amendment and, if so, whether the Senate will pass it as part of a larger package of amendments to the defense measure.

And even if it is included in the Senate bill, the amendments would still have to survive a House-Senate conference committee on the defense bill.

Durbin also could try to convince senators to include the proposals in an appropriations measure.

However, Greg Mesack, NAFCU’s senior vice president of government affairs, told reporters Monday that the financial services industry has made its opposition so loud that he doubts it could be added to any end-of-year bill.

“It’s too toxic,” he said.

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