Reps. Shelley Moore Capito (R-W.Va.) and Debbie Wasserman-Schultz (D-Fla.) were joined by 26 of their colleagues in sponsoring HR 1081 to delay implementation of a Federal Reserve rule, which would impact consumer debit card usage and the smaller financial institutions which issue them.
At a March 2 Congressional hearing, members of Congress noted that this rule will simply not work, and they are not alone in their concern.
Federal Reserve Board Chairman Ben Bernanke, the National Credit Union Administration Board Chairman and bank regulators have all voiced their considerable concerns for small debit card issuers.
A range of consumer groups and civil rights organizations, including the Consumer Federation of America, the National Community Reinvestment Coalition and the NAACP have also raised fears about the impact on consumers. With this much uncertainty, a delay of the implementation is needed to prevent the adverse impact that will be felt by credit union members in the form of higher fees, reduced debit card availability and other restrictions.
The rule would cap interchange rates on consumer debit card purchases. It was a result of the interchange provision of the Dodd-Frank Act, passed in the 111th Congress. The bill did not receive a fair hearing in the Senate Banking Committee, as is traditionally the case. Although the Federal Reserve was directed to exempt small institutions like credit unions, the rule essentially subjects these institutions to the same rate cap.
Congresswoman Capito and her colleagues have it right by slowing this process down and proceeding cautiously. Credit union members, and bank customers who rely on their debit cards to make essential purchases without writing checks, should not have to pay higher fees especially since debit cards help increase sales and provide convenience to merchants who voluntarily accept them.
Also, these financial institutions assume all of the risk of fraud and provide immediate payment to merchants.
Now is not the time to raise unnecessary fees on consumers. It is time to thank lawmakers like Congresswoman Capito who want to proceed carefully on this matter.
Watts, of Parkersburg, is president of the West Virginia Credit Union League.