Senate Hearings: Interchange Fees and Overdraft Protection

Committee hearing mallet

Wednesday was a busy day for hearings in the Senate on Capitol Hill. The morning started with a hearing in the Senate Judiciary Committee to review interchange fees.

Committee Chairman Richard Durbin (D-IL), author of the 2010 Durbin-Amendment on interchange fees, led the committee in an investigation of anti-trust matters, which was that day’s premise. Durbin alleged payment networks Visa and MasterCard have engaged in anti-competitive practices.

The other senators, however, were more balanced in their approach. Some noted their opposition to the Durbin Amendment. The sole witness from a multi-billion dollar bank was also afforded liberties to counter various claims, as well as explain data security practices —  as well as free checking and rewards issues associated with the Durbin Amendment.

The overall message was that there are deep concerns on both sides about prices, inflation, harm to consumers, data and privacy security, and the ability to provide credit. With Sens. Dianne Feinstein (D-CA) and Alex Padilla (D-CA) both holding seats on the committee, it’s notable that neither were in attendance. Both offices have extended an understanding of credit unions’ position on the issue.

Overdraft Protection
The same day, the Senate Banking Committee’s Financial Institutions and Consumer Protection Subcommittee held a hearing to assess overdraft fees. The discussion was similar to previous hearings.

A witness from a Washington, D.C.-based think-tank expressed multiple recommendations to address overdraft protection products, such as mandating the offering of BankOn Program accounts, increasing fee-reporting requirements for credit unions over $1 billion in assets, and ensuring consumers have suitable cure time.

Sen. Catherine Cortez Masto (D-NV) serves on the committee and asked more direct questions regarding opportunity and access for low-income and rural communities. There was also a considerable discussion about true real-time payments as being a solution.

Leagues & CUNA Remain Engaged
Neither hearing in either committee provides any consensus on these issues.

Nonetheless, the California and Nevada Credit Union Leagues and the Credit Union National Association (CUNA) remain heavily engaged in these battles.

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