ABA Dodd-Frank Tracker

Fed: No Plans to Revise Interchange Fee Standard

2013-03-06T08:28:00.000-05:00

The Federal Reserve doesn’t plan to revisit its final rule capping debit card interchange fees at 21 cents per transaction, the agency said yesterday as part of a report it released on 2011 transactions. The report found that for 67 percent of issuers covered by the rule, the average cost of authorizing, clearing and settling debit card transactions in 2011 was less than 21 cents.

“Covered issuers that had average ACS [authorizing, clearing and settling] costs below 21 cents in 2011 processed well over 99 percent of all reported covered transactions, the same proportion as in 2009,” the last year the survey was conducted, the Fed said.

The Fed estimated that debit-card fraud losses for all parties -- merchants, cardholders, and issuers -- was $1.38 billion in 2011, with an average loss of about 8 basis points per debit card transaction, down slightly from 2009.

Read the report.

ABA Telephone Briefing: Chip Cards: 101 – What Do I Need to Know?

2013-01-25T08:00:00.000-05:00

ABA will be hosting a live two-hour telephone briefing/Webcast from 2:00 to 4:00 p.m. ET on Tuesday, January 29, with an ABA panel of industry experts to explain what you need to know, when you need to know it and what other banks have done in this space already. The topic of EMV will be big in the coming years. Get your footing in this call and be ready for more advanced topics as the year goes on.

The panelists will provide an overview of what payment network rules are changing on both networks and the deadlines and liability shifts related to it. Also you’ll gain insights to what they have seen across the industry as the business case for EMV from the merchant, processor and banking community.

Read more and register.

FTC Submits Dodd-Frank Report to Congress

2012-12-27T08:18:00.002-05:00

The Federal Trade Commission (FTC) issued a report to Congress explaining steps the agency has taken in connection with new rules on debit card transactions that were put in place last year by the Federal Reserve Board as required by the Dodd-Frank Act. These new rules include restrictions on interchange fees and the prohibition of exclusive networks for debit card transactions. The FTC’s report includes an explanation of recent law enforcement, outreach, and other activities FTC has used to implement these new rules.

Read the report.

Governor Duke on Community Bank Mortgage Lending & Basel III Concerns

2012-11-12T11:51:00.000-05:00

FDIC Governor Elizabeth Duke also spoke to community bankers during the 8th Annual Community Bankers Symposium hosted by the Federal Reserve Bank of Chicago, the FDIC, and OCC.

Duke spoke about community bankers’ concerns regarding the Basel III proposals and noted the regulators have expressed their intentions to delay implementation deadlines of these proposals.

We heard many different concerns during our outreach efforts, but there were some recurring themes, including: the complexity of the proposed changes, the operational costs that would be incurred to track data that are not currently needed to calculate capital ratios, the potential impact on mortgage lending of the proposed mortgage risk weights, the accelerated phase-out of trust preferred securities from tier 1 capital, and the potential volatility in regulatory capital arising from the inclusion of unrealized gains and losses on available-for-sale securities.

It's still far too early in the process to know where we and the other agencies are going to come out on these and other issues, or when final rules may be released. But what I can promise you is that before we issue final capital rules, we will do everything possible to address the concerns that have been expressed…

Duke also spoke about some data she has been studying regarding the effects of regulations as they relate to residential mortgage lending at community banks.

I am convinced that the best course for policymakers would be to abandon efforts for a one-size-fits-all approach to mortgage lending.

I think an argument can be made that it is appropriate to establish a separate, simpler regulatory structure to cover such lending.

Such a regime should still establish appropriate safeguards to protect consumers, but it should do so in a way that recognizes the characteristics of community bank lending, perhaps by focusing on appropriate disclosures and relying on regular on-site supervision to test for appropriate underwriting and loan structuring.

Read Duke’s full remarks.

ABA Analyzes Election’s Likely Impact on Banking

2012-11-07T15:00:00.000-05:00

ABA’s government relations team has prepared an analysis of how the 2012 election will affect the banking industry. The analysis, which is available on aba.com, reviews the likely impact on such key issues as Dodd-Frank Act implementation, Basel III, the CFPB, housing reform, the fiscal cliff and tax reform.

This election was one of the most important for the banking industry in modern times. As is the case with most informed Americans, bankers remain concerned with the difficult issues our country faces on the budget deficit, entitlement reform, tax policy and heath care -- issues that are already having a profound effect on economic growth.

Read the members-only analysis.

Because the Obama Administration and Congress will be making decisions that will influence banking's future, ABA strongly encourages bankers to plan to attend the 2013 ABA Government Relations Summit, to be held April 15-17 in Washington, D.C. The conference offers bankers the opportunity to hear detailed briefings from Washington insiders and express their views to policymakers on key issues. Registration is free.

Read more about and register for the summit.

Durbin Amendment Causes Parking Fee Increases

2012-11-01T15:13:00.000-04:00

Parkmobile USA, a mobile payments company with an exclusive contract for D.C. municipal parking areas, told customers in an email last week that parking transaction fees would rise to 45 cents from 32 cents beginning October 29 as a result of the Durbin Amendment—a provision of the Dodd-Frank Act. The email stated:

[The added costs are] triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment.

The company retracted its statement after being contacted by Senator Durbin.

Read more by following the link in the ABARegPolicy twitter feed on the right of the Dodd-Frank Tracker homepage.

Keating Letter to Editor: Time for Retailers to Move On

2012-10-04T08:09:00.000-04:00

It’s time for retailers to move on and stop asking Congress to intervene on the interchange issue, ABA President and CEO Frank Keating said in a letter to the editor published today by Politico, a prominent Capitol Hill newspaper.

Keating noted that after seven years of court-overseen negotiations, retailers and the card industry in July reached an unprecedented legal settlement that provides about 7 million merchants with more than $7.2 billion. Yet retailers are asking Congress to step in with more government price controls.

[Some retailers] want to continue enjoying the benefits— and lower costs—that come from our nation’s payments system without paying for it, all while attempting to bully Congress into enacting more harmful price controls. Negotiated settlements be damned.

For the sake of consumers and the broader economy, it’s time to put this matter to rest once and for all. Retailers and their surrogates may continue to parade out half-truths that deny that anything bad has come from government price controls, but don’t be deceived. It’s a bad deal all around.

Read the letter.

Retailers’ Interchange Savings Does Not Help Customers

2012-09-28T11:24:00.000-04:00

The Electronic Payments Coalition (EPC) has released a study showing that one year after the Federal Reserve’s interchange rule under the Durbin amendment went into effect retailers have not passed on their substantial savings to customers.

“Despite retailer promises of lower prices, consumers paid on average 1.5% more after the implementation of the Durbin amendment,” the EPC said. “These higher prices for consumers come as retailers save billions and debit card issuers are forced to make up for lost revenue.”

View the report.

The Week Ahead: October 1 - October 5

2012-09-28T08:58:00.002-04:00

Sunday

Final Rule CFPB: Large Consumer Reporting Agency Supervision.
Read more.

Monday

FDIC Extends Transition Period for Large-Bank Loan Definitions. Read more
Final Rule CFTC: Futures Commission Merchant Regulations. Read more.
Final Rule Federal Reserve: Debit Card Interchange Fee, Electonic Funds Transfer Act Effective. Read more.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Countdown to Convention
The ABA Annual Convention, Oct. 14-16 in San Diego, is our time to unite, commit and connect as we examine challenging issues and think strategically about how to compete and keep the lead. Look for insightful, nationally recognized speakers and learn from pragmatic strategic solutions sessions on critical topics. A Directors’ Forum, peer roundtables and gala receptions round out the experience. The countdown to California is underway — be there!

Sen. Durbin: Expect More Intervention in Interchange Issue

2012-09-26T08:32:00.002-04:00

It would be a "serious mistake" to conclude that the July interchange fee litigation settlement between the card industry and retailers will put to rest congressional involvement in the issues surrounding payments system, Sen. Richard Durbin (D-Ill.) said yesterday in a letter to ABA President and CEO Frank Keating.

Durbin was responding to Keating's letter last week urging Congress to end the debate over interchange fees and financial support of the payments system by rejecting calls from some retail groups to impose even more government price controls that hurt consumers.

Keating noted that the Retail Industry Leaders Association said the settlement, which provides more than $7.2 billion in payments to about 7 million merchants, was not enough, and it implored Congress to impose further price controls.

Durbin, in essence, agreed with the retailers. "If this proposed settlement is finalized, millions ... whose interests were not represented in the secret settlement negotiations would be negatively impacted," he said. "Adoption of this proposed settlement would almost certainly guarantee that future congressional intervention will be necessary ... ."

Durbin added—without citing any evidence—that small banks and credit unions "have thrived" since his amendment took effect. Many consumers also have received discounts for buying products with their debit cards, and have benefited from merchants keeping prices down because of lower interchange costs, he said.

Read Durbin’s letter.
Read Keating's letter.

ABA: Consumers have Not Benefited from Interchange Rule Changes

2012-09-24T08:24:00.000-04:00

ABA in joint trades letter to Majority Leader Harry Reid, Speaker John Boehner, Republican Leader Mitch McConnell, and Democratic Leader Nancy Pelosis discussed the one-year anniversary of the Durbin amendment.

On October 1, 2011, the Durbin amendment was implemented as part of the Dodd-Frank legislation, shifting $8 billion from banks to the retailers. So far there is no evidence that consumers are seeing lower prices as a result; a direct contrast from what they were promised.

A new GAO study titled, “Community Banks and Credit Unions: Impact of the Dodd-Frank Act Depends Largely on Future Rulemakings,” addresses these debit card interchange reforms. The study cites several findings specific to the many hardships that the community banks and credit unions, in particular, have endured since the Durbin amendment was implemented almost exactly one-year ago.

But the most glaring example is the utter lack of benefit to consumers. Despite promises by retailers, and despite a realized $8 billion windfall by these retailers over this past year, consumers have yet to see discounts for using their debit cards at the register.

In addition to the ABA, the letter was signed by the Credit Union National Association (CUNA), the Independent Community Bankers of America (ICBA), and the National Association of Federal Credit Unions (NAFCU).

Read the full letter.
View the GAO study.

ABA to Congress: End Interchange Fees Debate

2012-09-21T08:57:00.000-04:00

ABA urged Congress to end the debate over interchange fees and financial support of the payments system by rejecting calls from some retail groups to impose even more government price controls that hurt consumers.

ABA was responding to a Retail Industry Leaders Association (RILA) letter sent to Congress this week. RILA said the card industry and retailers’ July settlement of an antitrust lawsuit providing more than $7.2 billion in payments to about 7 million merchants was not enough, and it implored Congress to impose further price controls.

ABA President and CEO Frank Keating said in a letter to House and Senate leaders,

In truth, nothing is ever enough for some in the retail community and their desire to enjoy the benefits of our nation’s truly efficient payments system without ever having to pay for it. It is time for the Congress to say enough is enough.

Keating noted that more than two years after the Durbin amendment’s enactment its net effect has been increased profits for big-box retailers, higher costs for small merchants, significant reductions in revenue available for banks to serve local communities, and no sign of the lower retail prices consumers were promised.

We do not believe it is in the interest of policymakers or the consumers they represent to repeat the mistakes of the past by expanding price controls to more aspects of our economy. Policymakers from both ends of the political spectrum have expressed their support for the settlement as the appropriate means to resolve this dispute. We strongly agree.

Read ABA’s letter.

Dodd-Frank Act Helping Community Banks?

2012-08-28T15:55:00.000-04:00

Treasury in a recent blog post attempted to explain how the Dodd-Frank Act has helped Main Street banks—community banks. The post states Treasury “recognizes that small banks were not the cause of the financial crisis,” and attempts to explain how new regulations “level the playing field” for community banks.

Read Treasury’s post here.

ABA has identified multiple issues facing community banks that have stemmed from the Dodd-Frank Act, including the following:

Capital Requirements
The Creation of the Another Regulatory Supervisor: CFPB
FDIC Coverage and Assessment Base Changes
Mortgage Finance Changes
Housing: QM and QRM Changes
Interchange Restrictions
Municipal Advisors Regulations
The Merger of OTS into OCC
Preemption Changes
Changes for Savings and Holding Companies
New Swap Regulations
Volcker Rule

These issues are discussed in the ABA online booklet—“Dodd-Frank and Community Banks: Your Guide to 12 Critical Issues.”

Download the free guide.

Fed Issues Final Interchange Fraud Rule

2012-07-27T16:16:00.000-04:00

The Federal Reserve issued a final rule on interchange this afternoon. The rule will allow issuers to adjust their rates up to one cent per transaction. This rate is the same as the interim final rule. The final rule does make changes simplifying the elements required to be included in an issuer's fraud-prevention policies and procedures.

Read the press release.
Read the rule.

See some of ABA's resources on interchange policy.

ABA Keating: Retailers, Not Consumers Benefit From Settlement

2012-07-16T07:46:00.000-04:00

ABA is hopeful that the Visa-MasterCard settlement marks the final chapter in what has always been nothing more than a legal battle between two industries over who should pay to support the nation’s incredibly efficient payment system, ABA President and CEO Frank Keating said in a statement Friday.

Let’s be clear -- retailers, not consumers, benefit from … [the] resolution. This settlement even provides merchants with the ability to impose ‘checkout fees’ on customers just for using credit cards.

Even after receiving an $8 billion annual windfall from the Durbin amendment, they refused to pass along promised savings to customers and sued the Fed for even more profits. Big-box retailers will likely seize this opportunity to ask Congress for even more handouts.

He added that if retailers use the settlement to justify more government price controls, they will be just trying to profit at their customers’ expense.

These types of issues are best resolved by market participants. Recent history illustrates the negative consequences for consumers when policymakers choose winners and losers and distort the marketplace.

The ill-conceived passage of the Durbin amendment, which led to increased profits for big-box retailers and no savings for consumers, was an example of such marketplace distortion, he said.

Only time will tell if this history will repeat itself, as retailers continue to show little regard for consumers. While the banking industry may not like all the results in this case, our industry is ready to put this matter behind us and continue playing a critical role in our nation’s economic growth and job creation.

Read Keating’s statement.

Visa, MasterCard Settle Lawsuit With Retailers on Credit Card Fees

2012-07-16T07:44:00.000-04:00

Visa, MasterCard and credit card-issuing major banks agreed to pay retailers $6.05 billion to settle a long-running lawsuit alleging the violation of antitrust laws in setting credit card interchange fees.

The out-of-court settlement, which was announced late Friday, also includes a 10-basis-point reduction in credit card interchange rates for eight months -- estimated to equal about $1.2 billion -- that will be paid to retailers participating in the suit, and will be deducted from the interchange revenue of all banks.

The settlement also eliminates network prohibitions on the retail surcharging of customers for using credit and charge cards at the point of sale -- subject to a cap and retailer consumer disclosures. In essence, this permits the merchant to impose a “checkout” fee at the cash register for the use of the card.

In addition, the settlement includes provisions that extinguish the ability of all merchants to challenge network rules on point-of-sale issues, including interchange price-setting. It also contains merchant concessions that the agreement addresses all retailer competitiveness concerns over interchange rules.

The changes are likely to start taking effect in late 2012 or early 2013, although the full impact will likely occur later.

Read an ABA backgrounder on the issue.

Dodd-Frank Threaten Survival of Community Banks

2012-06-18T08:08:00.001-04:00

Dodd-Frank Act regulations threaten the survival of many community banks and the towns they serve, ABA President and CEO Frank Keating said during an interview last week on Bloomberg Radio's "The Hays Advantage."

Many small towns and communities of America … exist because of the bank in their town ... and if those small banks that had nothing to do with the fall of ’08 are crippled as the result of pile-ons of regulations and costs, they’ll find a buyer … or they’ll just get out of the business entirely.

He explained that there is a danger that Dodd-Frank regulations can hurt or destroy some small-bank business models.

What is the Consumer Financial Protection Bureau going to do in the fair-lending space? What is the [CFPB] going to do in terms of the overdraft fees, and all of these other things that are central to some small banks’ business models?

People need to realize that there will be reactions to whatever actions all of these 7,500 pages of [Dodd-Frank] regulations demand. And we want to make sure as an industry that those reactions are sensible and beneficial to the public, and not just crippling to an industry that’s essential for growth, prosperity and jobs.

Keating also addressed the JPMorgan Chase trading loss, Basel III and the Volcker Rule in the wide-ranging interview.

Listen to the interview.

Groups Urge Congress to Repeal Durbin Amendment

2012-06-12T08:26:00.000-04:00

A letter from 18 groups—including the Competitive Enterprise Institute, Americans for Prosperity, and Americans for Tax Reform—opposing the price controls in the Durbin amendment wrote Congress to urge them to repeal of the Durbin amendment and resist similar mandates on retailers.

We urge you to give consumers a break by repealing price controls on banks and credit unions currently in place... [The Durbin Amendment] has given retailers billions in savings… Yet six months after its implementation, evidence shows that retailers have not passed along debit-card interchange-fee saving to consumers.

Americans for Prosperity has accurately captured the views of all of us in the free-market movement: “The solution here is not more regulation or political demagoguery. The solution is the free market. Let banks, merchants, and payment card networks work out interchange fees in a system of free and voluntary exchange. Let consumers decide what products work best for them at what prices, and let competition and innovation (not politicians) drive them to the best products. Repealing the debit card interchange price caps entirely and getting the government out of the way is the only way to restore balance in this market."

Read the full letter.

Cordray: CFPB Has Duty to Ensure Prepaid Cards’ Safety

2012-05-24T08:01:00.000-04:00

At a field hearing yesterday in Durham, N.C, CFPB Director Richard Cordray said the CFPB has a duty to ensure that prepaid cards are safe.

[I]nnovation can bring great benefits to consumers and can provide those outside the traditional banking system with more access to financial products that meet their needs.

But we have a duty to make sure these products are safe for consumers and that prepaid card issuers do not make money by relying on tricks or traps that are unsustainable for cardholders.

Cordray noted that the unbanked and underbanked have driven the growth in prepaid cards, and they especially need products whose costs and risks are clear upfront.

Yesterday, we posted on the CFPB's filing of an Advance Notice of Proposed Rulemaking (ANPR) requesting comments on general purpose reloadable (GPR) prepaid cards, as the bureau considers extending Regulation E protections to GPR cards. At the field hearing Cordray also spoke of the ANPR.

Read more regarding the ANPR.
Read Cordray’s full speech.
Watch the field hearing on CFPB's blog.

Extending Regulation E Protection to Prepaid Cards

2012-05-23T08:15:00.000-04:00

The CFPB filed an Advance Notice of Proposed Rulemaking (ANPR) requesting comments on general purpose reloadable (GPR) prepaid cards, as the bureau considers extending Regulations E protections to GPR cards.

Specifically the CFPB would like information regarding how prepaid cards work, including costs, benefits, and risks to consumers. The ANPR requests comment on ten broad questions regarding GPR cards which fall into four categories: regulatory coverage of products by some or all of Regulation E, product fees and disclosures, product features, and other information on GPR cards.

Comments will be due 60 days from the official publication of the ANPR in the Federal Register.

Read the ANPR.

CFPB Field Hearing On Prepaid Cards

2012-05-18T09:52:00.001-04:00

The CFPB will hold a field hearing in Durham, North Carolina on prepaid cards on Wednesday, May 23, 2012, at 12:00 noon. The field hearing will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer and civil rights groups, industry representatives, and members of the public.

The event is open to the public but requires a reservation.

Read more & RSVP.

U.S. Banks Answer Durbin with Prepaid Cards

2012-05-14T15:11:00.000-04:00

FitchRatings released a study showing an increase in the offering of prepaid cards, as banks attempt to offset revenue reduction resulting from implementation of the Durbin Amendment. Prepaid card issuers are not limited by the Durbin Amendment. From the FitchRating press release:

We believe Durbin could, on average, cut potential fees on debit card transactions by one-half.

The impact on card fee generation by Durbin has prompted many banks to impose new fees on ancillary products… As a result, we believe the marketing of prepaid cards or reloadable cards is likely to increase materially, given that under-banked consumers now have fewer payment options available to them.

Card legislation has been significant in recent years and further pressure is expected due to oversight by the Consumer Financial Protection Bureau (CFPB).

Read the FitchRating press release.

ABA: Too Soon to Determine Durbin Amendment’s Consequences

2012-05-02T09:03:00.000-04:00

ABA president and CEO Frank Keating released a statement in response to the Federal Reserve’s comparative information on the average debit card interchange fee by payment card network research released yesterday.

Due to the Durbin Amendment’s phased implementation, it’s impossible for this initial report to fully reflect or predict the consequences of upending the marketplace with government price controls. It’s just too soon to tell. While it’s too early to see the Durbin Amendment’s full effect on community banks, its impact on consumers and small businesses has never been more apparent.

While retailers pocket $7 billion annually from lower interchange costs, their customers pay higher fees as institutions adjust to government-imposed losses in revenue. At the same time, many small businesses now face higher interchange rates for low-dollar transactions, a classic example of strange things that occur when government creates unnatural pressures to make up for lost revenue. The Durbin Amendment’s primary beneficiaries continue to be big-box retailers who want to reap the benefits of our nation's payments system without paying for it or passing along their savings to customers as promised.

ABA firmly believes the Durbin Amendment’s small-bank exemption can’t work long-term. No legislation can exempt community banks from market forces, and having two prices for the exact same product is simply not sustainable in a competitive system.

Average Debit Card Interchange Fees Decline Substantially

2012-05-01T12:48:00.000-04:00

The Federal Reserve Board on Tuesday published comparative information on the average debit card interchange fees that each payment card network charges acquirers (and indirectly merchants) and provides to debit card issuers.

As part of the Board’s interchange fee standards rulemaking process, the Board collected 2009 data from payment card networks. The aggregate data provided by the networks indicated that the average interchange fee for all issuers was 43 cents. Data collected after the rule took effect on October 2011 show that the average interchange fee per transaction received by non-exempt issuers in the fourth quarter of 2011 declined substantially to 24 cents while the average interchange fee received by exempt issuers was 43 cents.

Read the Federal Reserve Board press release.
Average Debit Card Interchange Fee by Payment Card Network

2012 Regulations will be Large, Costly, & Complex

2012-04-10T14:07:00.000-04:00

The CEO of JPMorgan Chase, Jamie Dimon, included a letter to shareholders in the JPMorgan Chase 2011 Annual Report, discussing a number of concerns regarding upcoming regulatory reforms. The letter stated new regulatory requirements will be large, costly and complex, demanding enormous resources.

JPMorgan Chase estimates over the next few years tens of thousands of their employees will work on regulatory changes, of whom 3,000 will be devoted full time to the effort at a cost of close to $3 billion. The bank also recognizes the cost of credit and the cost of banking services will modestly increase as the new regulations are implemented.

In the letter, Dimon states:

As a result of the Dodd-Frank, we now have multiple regulatory agencies with overlapping rules and oversight responsibilities. A robust financial system needs coordinated and consistent regulation that is strong, simple and transparent. The regulators should have clear authority and responsibility.

Dimon also discussing the importance of policy makers to ensure the “final outcome is fair to American banks and that they are fully free to compete in the face of increasingly tough global competition,” pointing to regulations that are unique to American banks such as the Volcker Rule.

Read Dimon’s full letter to shareholders by visiting the JPMorgan Chase homepage, select the Investor Relations tab across the top of the page, then select the Annual Report & Proxy header on the left of the page.