Community Development Banking List
05-13-2010, 03:58 PM
Original message from: chris@jumbocdi.com
I got this from one of my credit union clients. Please read and take action if you agree. If you don't agree then just disregard. Please let your credit union friends know.
Thank you,
cd :O)
Chris Duncan
Jumbo CD Investments, Inc.
Sent: Thursday, May 13, 2010 8:37 AM
Subject: URGENT CALL TO ACTION
Friends of Credit Unions,
I am so sorry to fill up your inbox but.. please see the following message below... it is getting critical!
Gina
Based on recent activity, it appears that a vote on Durbin Interchange Amendment #3989 will take place sometime today unless a Senator makes a public objection to the time agreement. Without such an objection, Senator Durbin could reach an agreement that will permit this and other amendments to be considered under a 50 vote procedure.
Please contact Senator Lincoln and Senator Pryor's office immediately and ask them to immediately object to a vote on this amendment. The message is:
a.. "Please object to any unanimous consent request to bring Durbin Amendment 3989 to the floor, either on its own or as a package of amendments, so that the amendment will require 60 votes to pass.
b.. The amendment is unrelated to regulatory restructuring and is not germane.
c.. No hearings on the subject matter of the amendment have occurred in the committee of jurisdiction or anywhere else."
Here is more information about the Durbin Amendment.
Durbin Amendment 3989/3932 "Exemption for Small Issuer" Provisions
Whether $1 billion or $10 billion, the Durbin price control "carve out" provides no protection for small financial institutions-it harms credit unions and their members in order to permit big merchants to shift their costs.
Why wouldn't the exemption for small financial institutions work?
This amendment provides a smoke screen which purports to exempt community institutions from the government price fixing; raising the threshold for the size of the bank to $10 billion does not make the exception work any better.
Under the carve out, retailers claim that community institutions would be able to charge market based interchange fees. Does anyone really believe that merchants would pay market based rates for small institution cards, when they can accept the price controlled cards from giant banks, at little or no cost? Of course not-merchants will drive customers to the price controlled cards. This will destroy community bank and credit union programs. Millions of consumers prefer to use community institutions, and the amendment would force them to use larger institutions with their government price controlled programs.
In reality, it provides no protection for community institutions.
· If small financial institutions continue to charge market-based interchange fees, merchants will simply steer consumers to price-controlled large institution products - a provision that this amendment explicitly allows - or some merchants will just refuse to accept the cards.
How the amendment works:
1) It first requires that the Federal Reserve set an interchange fee that is "reasonable and proportional" to the actual cost incurred "with respect to the transaction". In other words, the cost of the electrons that it takes to move a particular sum of money one time from account "a" to "b." It does not take into account the costs of operating a global network, the costs of guaranteeing a payment, the cost to the financial institution of attracting and maintaining the customer's account from which the money is withdrawn, fraud protection, and so on. In other words, the amendment would essentially require debit a no cost. WalMart charges a consumer $11 to transfer $100 within the United States, with no credit risk. Yet card issuers would receive nothing for the transfer.
2) It then generously exempts institutions under $10 billion in assets from the price controls, so they can charge merchants a realistic cost versus large banks, which would have to provide the service to merchants basically virtually for free. Of course, no merchant is going to want to accept a card from a small institution that comes under the carve out. The amendment then makes sure that merchants will not have to accept a community institution cards because:
The amendment expressly permits merchants to exclude community institution cards by setting very high minimums and very low maximums for all cards except those issued by price-controlled institutions.
I got this from one of my credit union clients. Please read and take action if you agree. If you don't agree then just disregard. Please let your credit union friends know.
Thank you,
cd :O)
Chris Duncan
Jumbo CD Investments, Inc.
Sent: Thursday, May 13, 2010 8:37 AM
Subject: URGENT CALL TO ACTION
Friends of Credit Unions,
I am so sorry to fill up your inbox but.. please see the following message below... it is getting critical!
Gina
Based on recent activity, it appears that a vote on Durbin Interchange Amendment #3989 will take place sometime today unless a Senator makes a public objection to the time agreement. Without such an objection, Senator Durbin could reach an agreement that will permit this and other amendments to be considered under a 50 vote procedure.
Please contact Senator Lincoln and Senator Pryor's office immediately and ask them to immediately object to a vote on this amendment. The message is:
a.. "Please object to any unanimous consent request to bring Durbin Amendment 3989 to the floor, either on its own or as a package of amendments, so that the amendment will require 60 votes to pass.
b.. The amendment is unrelated to regulatory restructuring and is not germane.
c.. No hearings on the subject matter of the amendment have occurred in the committee of jurisdiction or anywhere else."
Here is more information about the Durbin Amendment.
Durbin Amendment 3989/3932 "Exemption for Small Issuer" Provisions
Whether $1 billion or $10 billion, the Durbin price control "carve out" provides no protection for small financial institutions-it harms credit unions and their members in order to permit big merchants to shift their costs.
Why wouldn't the exemption for small financial institutions work?
This amendment provides a smoke screen which purports to exempt community institutions from the government price fixing; raising the threshold for the size of the bank to $10 billion does not make the exception work any better.
Under the carve out, retailers claim that community institutions would be able to charge market based interchange fees. Does anyone really believe that merchants would pay market based rates for small institution cards, when they can accept the price controlled cards from giant banks, at little or no cost? Of course not-merchants will drive customers to the price controlled cards. This will destroy community bank and credit union programs. Millions of consumers prefer to use community institutions, and the amendment would force them to use larger institutions with their government price controlled programs.
In reality, it provides no protection for community institutions.
· If small financial institutions continue to charge market-based interchange fees, merchants will simply steer consumers to price-controlled large institution products - a provision that this amendment explicitly allows - or some merchants will just refuse to accept the cards.
How the amendment works:
1) It first requires that the Federal Reserve set an interchange fee that is "reasonable and proportional" to the actual cost incurred "with respect to the transaction". In other words, the cost of the electrons that it takes to move a particular sum of money one time from account "a" to "b." It does not take into account the costs of operating a global network, the costs of guaranteeing a payment, the cost to the financial institution of attracting and maintaining the customer's account from which the money is withdrawn, fraud protection, and so on. In other words, the amendment would essentially require debit a no cost. WalMart charges a consumer $11 to transfer $100 within the United States, with no credit risk. Yet card issuers would receive nothing for the transfer.
2) It then generously exempts institutions under $10 billion in assets from the price controls, so they can charge merchants a realistic cost versus large banks, which would have to provide the service to merchants basically virtually for free. Of course, no merchant is going to want to accept a card from a small institution that comes under the carve out. The amendment then makes sure that merchants will not have to accept a community institution cards because:
The amendment expressly permits merchants to exclude community institution cards by setting very high minimums and very low maximums for all cards except those issued by price-controlled institutions.