Interchange Fees Forum

The thirtieth anniversary of OMB’s regulatory review office, OIRA-the Office of Information and Regulatory Affairs, was celebrated on Friday, May 20th.  The event was sponsored by Susan Dudley, a former OIRA Administrator, who presently heads the George Washington University Regulatory Studies Center.

Virtually all former Administrators and Deputy Administrators made presentations, including Jim Tozzi, the first Deputy Administrator of OIRA.

The Bureau of National Affairs Reports:

“Jim Tozzi, the first deputy administrator of OIRA, said the institution gives a protective shield against the wholesale dismantling of regulatory agencies, which play an integral role in society.

Massive Data Breach Occurs as Senator Dick Durbin Works to Eliminate Fraud Protection Funding for Banks, Credit Unions

WASHINGTON, May 24, 2011 — /PRNewswire/ — The Electronic Payments Coalition issued the following statement in response to the recent Michaels data breach:

Michaels craft stores urged thousands of their customers who recently had their debit card PIN numbers stolen to “immediately contact your bank” and “seek their advice on how to protect your account,” even as their Senator Dick Durbin works in Washington to eliminate the revenue that banks and credit unions use to cover such breaches.

From: Bloomberg

Federal Reserve Chairman Ben S. Bernanke said lawmakers should have “reason to be concerned” that an exemption for smaller lenders from U.S. caps on debit- card “swipe” fees won’t work and may cause banks to fail.

“I can’t say with certainty, but I think there is good reason to be concerned about it,” Bernanke said in response to a question at a Senate Banking Committee hearing today in Washington. If the exemption doesn’t work, “it’s going to affect the revenues of the small issuers, and it could result in some smaller banks being less profitable or even failing,” he said.

The Center for Regulatory Effectiveness (CRE) has sent the letter attached below to the Federal Reserve’s Chief Information Officer.  In the letter, CRE explains that the Board is required by statute to adjust allowable debit interchange fees to account for the full data security costs associated with debit card transactions.  The letter explains that debit card issuers have incurred significant costs because of third-party cybersecurity breaches – costs that issuers need to be covered by interchange fees.

See CRE letter to Federal Reserve attached below.

CRE-FederalReserve-CIOLetter

Written by

Melanie Payne
tellmel@news-press.com

• Melanie Payne – Consumer Watchdog

From: KBND

Debit card users could wind up paying the price for a misunderstanding with legislators. Interchange fees, or the fee for service when a debit card is used, is currently paid by the merchant. But officials of banks and credit unions agree that when proponents of the law were asking for signatures on petitions and pushing the legislation they misrepresented it’s purpose. Mid Oregon Credit Union Chairman Bill Anderson. “In large part the legislation was sold to Congress as one; they would not harm financial institution that were smaller (those under $10 billion in assets. And two, that it would not harm the consumer and it has nothing to do with the consumer directly as far as the interchange fees. ” Anderson says the consumer never did pay those fees so it doesn’t actually save them any money.  The merchants pay the fees for use right now, and the legislation would cut those fees by more than half. If that happens, both banks and credit unions agree the revenue would have to be made up somewhere, most likely at a cost to the consumer.