OFIR Commissioner Calls for Delay of Interchange Rule (Misc News: April 4, 2011)
OFIR Director Ken Ross sent a letter to the Federal Reserve Board requesting that it reconsider its approach in implementing the debit transaction fee rule under the Dodd-Frank Act.
“Despite congressional intent to exempt institutions under $10 billion, which includes over 450 banks and credit unions headquartered in Michigan, questions remain regarding the potential adverse impacts of the proposed rule,” Ross wrote. “Further, the Dodd-Frank Act requires rule implementation meant to establish standards for assessing whether the amount of any interchange fee is ‘reasonable and proportional to the cost incurred by the issuer.’ It does not mandate the setting of a specific fee limit.”
Ross said the Michigan’s economic recovery depends on a strong financial sector and the debit interchange will impact the industry’s ability to lend.
“While stability appears upon us, recovery for Michigan is fragile. Any additional earnings pressure on our banks and credit unions – including reduced ability to recoup interchange-related expenses – will undoubtedly have a negative effect on capital levels,” Ross wrote. “The net result of lower capital at our institutions is necessarily less lending.”
to read the full letter.