Author Archive

The Huffington Post and debit card interchange

Posted by on Friday, 21 January, 2011

The Huffington Post llThe Huffington Post news and opinion website has posted a new column from CUNA CEO Bill Cheney on the costs to credit unions and consumers of the coming rules on debit card interchange. See below for a link to the full article. Here is an excerpt:

“Some recent media reports have said small banks and credit unions are the big winners in the regulatory battle over how much revenue financial institutions should derive from the use of debit cards. (In industry terms, this is known as debit interchange revenue). Credit unions and small banks have a deserved reputation for being consumer-friendly. So logic would dictate that if you’re a credit union member or a small-bank customer, you should be feeling pretty good, right?”

- Bill Cheney
CUNA President & CEO
Posted on January 20, 2011 on www.thehuffingtonpost.com

Read the entire column, New Interchange Rules for Debit Cards: A Perceived ‘Win’ Is Really a Loss from Bill Cheney here. If you’d like to post your own comment, you can do so under the “reader comments” section on The Huffington Post.


Interchange is Red Hot, But MBLs are Heating Up Too

Posted by on Tuesday, 15 June, 2010

June has been consumed by the fight over debit interchange, but another key credit union priority: raising the statutory cap on member business loans, may soon be elevated as well.  They are two different issues, but do have something in common.  The credit union grassroots outpouring that has accompanied the interchange battle is also expected to have residual benefit in convincing Congress to enact an MBL bill.

The key developments that occurred when Credit Union National Association CEO Dan Mica testified on that issue in May before the House Financial Services Committee have added to the MBL issue’s momentum.  Chairman Barney Frank (D-Mass.) said then that he would hold a committee vote on MBLs relatively soon.  And another witness, Treasury counselor Gene Sperling, stated publicly the parameters (stemming from discussions with CUNA) under which the Administration would support raising the cap

Rep. Frank’s desire to move quickly to MBLs after dealing with financial reform is welcome and makes sense from a policy and economic standpoint.  The May U.S. employment figures were disappointing, generating talk of a jobless recovery.  Meanwhile the Senate is contemplating a jobs bill that could become a vehicle for MBLs in that body.  Why?  As CUNA, the leagues and CUs have emphasized repeatedly, raising the cap is a job-creating measure, generating loans that would lead to an estimated 108,000 jobs in just the first year.

Nor would the MBL plan come with any government cost. That sets it apart from the Administration’s plan to channel $30 billion leftover from the Troubled Asset Relief Program (TARP) to community banks as incentive to lend.  And, of course, beyond the job-creation and no-government-cost elements is another major policy imperative: small businesses are still in need of capital, and they’ve not been able to get it from the banks.  Federal Reserve Board Chairman Ben Bernanke flagged the problem in a speech this month, noting banks’ outstanding loans to small businesses fell in the first quarter of 2010 to $600 billion from $700 billion two years prior. He added that only 40 percent of small business that tried to borrow last year had all of their borrowing needs met.

Many credit unions can provide specific examples of small business borrowers turned away by banks, and the media has been paying attention.  A May 27 Wall Street Journal story (“Credit Unions Fight Cap Law”) spotlighted two such borrowers—a bagel shop owner in San Antonio, Texas and the owner of an inn and cultural center in Albuquerque, New Mexico.  Thanks to her loan from Randolph Brooks Federal Credit Union, the bagel shop owner just hired her 13th employee, the Journal noted, adding that the credit union helped after the owner had been rejected by several banks.

Too often, the banks aren’t lending. Yet they are the ones seeking to block the MBL legislation.  If the issue heats up again soon as expected, CUNA, leagues and credit unions will need to block the banks.  That  is where the grassroots efforts that were ramped up on the interchange fight will have residual benefit, both going forward as grassroots are again called upon—and by calling back to mind what legislators saw in recent weeks.

“Members of Congress have good memories; so do their staffs,” says John Magill, CUNA senior vice president of legislative affairs.  “They’ll remember vividly the massive response on interchange, which will definitely have a spillover effect on MBLs.  There will be instant recall of something that happened so recently, and it will have a positive effect on our lobbying efforts.”


Guess Who Made the BBB’s List of Top Consumer Complaints?

Posted by on Wednesday, 12 May, 2010

What industry tops the Better Business Bureau’s list of consumer complaints?  If you said banks (high fees, impersonal service, mega-mergers), good guess but no.  It’s cell phones. But what industry had the biggest spike in complaints over the past year?  If you said banks, now you’re right. 

Cell phones drew the most complaints last year, 37,477, up 2.1% from 2008, according to the BBB.  Consumers registered 29,920 gripes against banks, but that’s a whopping 42.3% increase over the previous year.  None of the others (cable TV, automakers, internet retail) came close.  A “MainStreet” news posting on Yahoo Finance took note of banks’ dismal standing on the BBB consumer complaint list and advised that larger banks in particular “better beef up their customer service fast—before customers decide that the credit union down the street will treat them, and their money, with greater care.” 

Many have already come to that conclusion. CUNA figures show credit unions added 1.2 million new members in 2009.  And credit unions’ share of the household savings market has grown from 9.2% at yearend 2008 to 9.8% at the end of 2009.  That’s a pretty big leap, CUNA’s Bill Hampel points out, considering it took from 1994 to 2008 for credit unions’ savings share to get from 8.0% to 9.2%.