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ICBA’s Fine Speaks Out on Harmful Senate Interchange Amendment

Carve-Out” Won’t Work for Main Street Community Banks

Washington, D.C. (June 9, 2010)—Independent Community Bankers of America (ICBA) President and CEO Camden R. Fine spoke out today against a harmful interchange amendment in the Senate’s Wall Street reform bill. During a press conference, Fine reiterated that the interchange amendment will be hazardous to Main Street community banks and their customers.

“First, and I believe most importantly, this amendment is not going to benefit consumers. Let’s be clear about that. This is about big box retailers wanting to pocket more money. It’s as simple as that,” Fine said. “Our nation’s community banks are able to provide valuable debit card services to their local customers because we currently have a debit card system that is balanced and doesn’t discriminate against small issuers. This amendment would create a discriminatory system, one that will only help too-big-to-fail institutions—the very institutions that triggered this financial crisis—become even larger at the expense of Main Street.”

The Senate amendment gives broad latitude to merchants to pick and choose what credit and debit cards they accept and directs the Federal Reserve to set debit interchange fees based on the cost of processing a debit transaction. Despite a “carve out” for small issuers, the amendment would not shield small issuers, such as community banks, or their customers from the harsh consequences of government price controls.

“There is a reason why ICBA didn’t seek a small issuer exemption from the interchange language—because we knew it wouldn’t work,” Fine said. “If this harmful Senate interchange amendment passes, Wall Street and mega-merchants will win and Main Street’s consumers and small merchants will lose.”

The current interchange system makes it possible for small community banks to provide card services to their customers because the card networks apply the same interchange rates for small and large issuers. By reducing interchange fees through government regulation, consumers will face higher costs through annual fees and increasing interest rates, as well as fewer choices as community banks are forced to exit the market, ultimately forcing consumers to use cards provided by the megabanks that caused the financial crisis.

For more information, visit www.icba.org.