Fed Releases Exempt and Nonexempt Lists for Debit Interchange Rule (Misc News: July 13, 2011)
The Federal Reserve has released its exempt and nonexempt lists of financial institutions that will be used to determine which institutions pay higher debit interchange fees.
Five Michigan banks and investment companies are on the Federal Reserve’s list of financial institutions that will be subject to the new debit interchange rules. Nationally, there are three natural person credit unions and three bridge corporate credit unions on the list. As expected, no Michigan credit unions are on the nonexempt list.
The Michigan institutions are Flagstar Bank in Troy, Comerica International Investment Corp. in Detroit, JPMorgan Chase Bank in Dearborn, Comerica Bank and Trust in Ann Arbor and Northern Trust in Bloomfield Hills. Comerica Bank, formerly of Detroit, is now based in Dallas.
The three natural person credit unions on the nonexempt list are State Employees CU in Raleigh, N.C., Navy FCU in Vienna, Va., and Pentagon FCU in Alexandria, Va. U.S. Central Bridge FCU in Lenexa, Kan., Western Bridge Corp. FCU in San Dimas, Calif., and Members United Bridge FCU in Warrenville., Ill., are the bridge corporates on the list.
In all, there are 578 institutions on the nonexempt list.
Click here to visit the Fed website for downloads of both lists.
The Fed said that a small number of institutions are not found on either list. These include institutions for which the Fed has incomplete affiliate data, De novo institutions for which the Fed did not have financial data as of December, and issuers without federal deposit insurance.
The Durbin amendment to the Dodd-Frank Consumer Protection and Wall Street Reform Act includes an exemption for issuers with less than $10 billion in assets.
If an issuer does not appear on either list and believes it is exempt from the interchange fee standards, it should "so certify to its participating payment card networks." If an institution believes its placement on a nonexempt list is inaccurate, the Fed said it may submit a request for a correction of the information to IssuerExemptionListsRegII@frb.gov.
Many parties — CUNA and the MCUL among them — have voiced concerns that the interchange law lacks an enforcement mechanism for the small issuers' exemption, and have said that there is no guarantee the payment card networks will operate a two-tiered system the exemption necessitates for small issuers. Still, supporters of financial institutions have said the final rule is a big improvement over the Fed’s original proposed rule.
The new rule sets debit interchange fees at 21 cents plus 5 basis points for fraud prevention. In addition, the Fed issued an interim final rule and sought comment on another rule that would allow institutions to charge an additional penny if they meet certain fraud prevention requirements.
When it adopted its final rule in June, the Fed board authorized its staff to report by April 2012 whether there is a two-tiered system and the impact of the rule on small issuers’ interchange fee income and a more comprehensive report by April 2013. The 2013 report is to include information on whether there has been a change in debit interchange fee income for small issuers, whether merchants are discriminating against small issuers and the impact of exclusivity provisions.