Second Durbin Interchange Attack Defeated; MBL Cap Increase Still in Play

Late Thursday night, AVCU President Joe Bergeron informed Vermont credit union leaders that the tireless lobbying efforts of CUNA, state leagues, and credit unions had achieved modest victories in two important legislative battlegrounds.  He also asked for a Call to Action directed at Vermont Senators Patrick Leahy and Bernie Sanders.

As reported in the trade press over the past few days, Senator Richard Durbin, Chairman of the Financial Services and General Government Subcommittee of the Appropriations Committee, was on the interchange attack again with his introduction of legislation (by way of amendment to an appropriations bill) to prevent the Federal Government from being charged credit card interchange rates that are higher than the lowest interchange rate on the market.  CUNA opposed this action and worked with the Maine Credit Union League and Senator Susan Collins to offer an amendment to strike the Durbin language and replace it with a study on convenience fees.  Her amendment was approved by the Senate Appropriations Committee late Thursday afternoon.

By a vote of 58-42 Thursday afternoon, the Senate failed to approve a motion to end debate on the small business legislation to which CUNA seeks attachment of Senator Mark Udall’s amendment to increase the credit union member business lending cap. Republicans are demanding that certain amendments, unrelated to the base legislation, be made. Leaders of both parties haven’t been able to agree on which amendments to consider.  Although the Udall amendment doesn’t appear to be in the mix at this time, the inability of the Senate to reach agreement provides more time for credit unions to push the issue. Senator Udall has been very adamant with the leadership about including his amendment, and has emerged as a credit union champion.  No votes are expected in the Senate until Monday evening at the earliest.

“We need your help,” Bergeron urged in his email.  “As I mentioned in an earlier report, both of Vermont’s senators have indicated their support for the Udall amendment to me, should it come to a vote before the Senate.  We’re asking credit unions to send a letter to Sanders and Leahy asking them to encourage Senator Reid to permit a vote on the Udall amendment.  The reason is obvious . . . . it will cost government $30 billion to get banks to do more business lending, while the Udall amendment allows credit unions to put $10 billion to work in small business with no government or taxpayer involvement at all. Deciding which is the better deal is a no-brainer.”

For information on how to send this important email letter to Vermont’s Senators, contact John or Joe.

CUNA Analyzes Effects of Interchange Regulation

Although credit unions with under $10 billion in assets are technically exempt from interchange regulations the Federal Reserve Board is writing following passage into law of the financial system regulatory reform bill, CUNA is particularly concerned that the law does not require the marketplace to accommodate higher fees for smaller issuers.  In response to credit union concerns in this area, CUNA has prepared a detailed review of the new interchange statutory provisions. The review focuses on provisions of the law as well as on concerns regarding the law and its implementation. (CUNA News Now, 7/28/10)

The interchange law directs the Federal Reserve Board to write rules on interchange fees for debit card purchases, a move which CUNA and credit unions strongly opposed as the legislation was considered by the U.S. Congress.  Though the new interchange law amends the existing Electronic Fund Transfer (EFT) Act by adding a new section, the interchange regulations will be implemented by the Federal Reserve, not the new Consumer Financial Protection Bureau, which will implement other laws, including other provisions of the EFT Act.

The Fed will be required to consult with the NCUA and other financial regulators, including the new Consumer Financial Protection Bureau, as it crafts the interchange regulations.

According to CUNA's analysis, it is unclear whether the Fed's rule will set the actual interchange rates or set standards for determining whether interchange fees are "reasonable and proportional" to an issuer's costs. There has been no definitive statement from any federal authorities on how interchange rates will be regulated.

Vermont Retailers Cite Future Credit Card Interchange Battle

Last Sunday’s Barre-Montpelier Times Argus interviewed Ron Hance, president of Heritage Family FCU and Michael Tuttle, president of Merchants Bank, for their thoughts on the long term effects of the recently passed financial reform bill. Hance cited both lower debit interchange resulting in higher credit union member costs, and keeping an eye on whether merchants actually pass along the benefit of reduced debit interchange to consumers, as they argued they would in their lobbying efforts.

Also quoted in the article was Tasha Wallis, executive director of the Vermont Retail Association, who indicated that merchants may be planning another battle over credit card interchange.  “I think retailers are going to pay very close attention to how they respond to this reduction,” Wallis was quoted, “because frankly there is still the issue of credit card interchange to take on. Passing on savings to consumers is certainly a way to show that further reform will further help consumers.”

Unfortunately for card issuing credit unions and community banks, there's no easy way to monitor whether merchants actually pass along reductions in debit interchange to consumers by way of lower prices, as they argued they would in all of their lobbying efforts. If studies of similar industry reforms in Australia are any indication, such a pass-through of debit interchange reductions, borne by credit unions and other card issuers, will never happen.

Next Friday is Early Bird Registration Deadline for September IRA Seminars

The deadline to save as much as 20% off the cost of training your credit union’s Individual Retirement Account staff is next Friday, August 6.  On Tuesday & Wednesday, September 21 & 22 at the Hilton Burlington Hotel, AVCU will present IRA Essentials and IRA Advanced seminars from 9:00 – 4:30.  The brochure and registration form available from our website explains the content of both sessions and outlines tuition options, which remain the same as 2009.  However waiting until after the Early Bird deadline to register will cost as much as $50 more per registrant, so we strongly urge credit unions to take advantage of the discounts and get their registrations in by next Friday.

Our IRA Trainer will again be Paul Kern, who has consistently received outstanding evaluations and feedback for the past three years that he has worked with Vermont's credit unions.  Attending AVCU’s IRA Essentials and Advanced sessions is a cost effective way for IRA Specialists to earn credits toward maintaining their certification.  Specialists are required to recertify by earning 30 credits during a 3 year period, 18 of which must be earned by attending one IRA SuperTrain session.  The remaining 12 credits can all be earned by attending AVCU’s annual IRA training.  Essentials attendees earn 2 recertification credits for each day long seminar they attend while Advanced attendees earn 5 credits.  By attending in-state training instead of a second (and significantly more expensive) SuperTrain session, credit unions can save thousands of dollars in travel and hotel costs while still keeping their employee certifications current.

CSS Spotlight … John M. Floyd & Associates

Based on member input, we’ve begun spotlighting a CUNA Strategic Services (CSS) vendor every other week to demonstrate to Vermont credit unions the variety of compliance, security, growth & retention, operations, technology, and lending services available through CSS.  Anyone interested in more information about CSS vendor partnerships is invited to contact AVCU Vice-President Bryan Kent.

If your credit union is looking for ways to generate additional income, tools to increase member value and loyalty, and / or be compliant with Reg. E changes, then a partnership with John Floyd and Associates (JMFA) for overdraft privilege is right for you.  With more than 30 years of experience in the industry, JMFA has been helping credit unions design overdraft privilege programs that add significant income to their bottom line while at the same time insuring compliance and member value.

For more information about JMFA call Greg Stumler today at (704) 641-1413, and learn why more and more Vermont credit unions are partnering with JMFA to offer overdraft privilege to their members.

InfoSight, Notes, Calendar & Employment

This Week’s InfoSight eNewsletter Topics

Tom Glatt Leaving REALTORS FCU

After nearly two years at the helm, Tom Glatt, president/CEO of REALTORS Federal Credit Union, announced on Thursday that he will leave the post Aug. 1. (Credit Union Times, 7/29/10)

Glatt, who was a featured speaker at AVCU’s 2008 Annual Meeting just months before being named president/CEO of the Rockville, Md.-based credit union, said “It’s very bittersweet … but we’ve done something here that has never been done before. We opened a virtual credit union in the worst economic time.”  Vermont CUSO L9.com created the online presence for the virtual credit union which opened for business in May of 2009.

Under Glatt’s tenure, the credit union grew to nearly $80 million in assets serving 5,500 members. According to NCUA Call Report data as of March, the CU had $43.4 million in shares and deposits. It also had a net worth ratio of 29.93% and was considered well-capitalized. 

Glatt said his affinity for the industry remains strong and he is currently looking for CU CEO positions in the Northeast region. He is confident that the CU will continue to grow even as the economy is in the midst of a prolonged recovery.

“When the economy gets better, growth will be explosive. I don’t know if there’s ever been a credit union that got to more than $75 million as fast as we did.”

Upcoming Event Calendar

8/4 “Your Credit Union’s Responsibilities and Liability When Check Fraud Occurs” (CUWT Web / CD)

8/5 “Growth Strategies: Retention is the New Acquisition” (ICUL QuickBite)

Download our full Distance Learning Calendar for July thru December

Employment Opportunities

Assistant Manager, Covered Bridge Credit Union (NEW Today!)

Share With Us

We’re always looking for pictures, press releases, and news that helps tell the story of why credit unions in general, and yours in particular, are so special to Vermont consumers.  Please send submissions to jcote@vcul.org.

Daily Rates

CUNA’s Financial Rates page offers information from the Wall Street Journal and U.S. Central Credit Union.